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If you are having or had some trouble making your mortgage payment each month and are now behind on mortgage payments, property tax or both, filing a Chapter 13 bankruptcy case can help. If you are facing a foreclosure sale date, filing a Chapter 13 bankruptcy case will stop the foreclosure of your home and foreclosure sale as soon as the bankruptcy case is filed. Filing bankruptcy implements the automatic stay, which is a court order stopping any and all foreclosure action or other actions to collect or enforce a debt.
Example:
- Mortgage payment is $2,500 a month
- You are 4 months behind, total of $10,000 owed on your mortgage
- If the Chapter 13 Plan term is 5 years (60 months), then you will pay approximately $167 a month for 5 years to repay the $10,000 owed
- If the plan is 3 years (36 months), then you will pay approximately $277 a month to repay the $15,000 that is owed on your mortgage
- These figures do not include the trustee fee or attorney fees
Filing a Chapter 13 bankruptcy will allow you to catch up on missed mortgage payments by spreading them out over the life of the Chapter 13 plan. The plan term is based upon your gross income. If your income is above the median income for the number of people in your household the plan term must be five years (60 months). If your income is below the median income for the number of people in your household the plan term can be three years (36 months). The first Chapter 13 plan payment is due 30 days from the date the case is filed. That will be the first month of the plan. In most mortgage agreements the mortgage company is not entitled to interest on the missed mortgage payments in the Chapter 13 plan. Mortgage companies will usually incur some miscellaneous fees and cost associated with you having missed multiple mortgage payments. The mortgage company will add these fees to the amount you are behind on and that will be included in the monthly Chapter 13 plan payment.
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