When someone is facing foreclosure on their home, they may consider filing for Chapter 13 bankruptcy in St. Louis, MO. This is a serious decision which should be discussed with an experienced bankruptcy attorney. Chapter 13 is not for everyone, but has helped many to a brighter financial future.
What is Chapter 13 Bankruptcy?
Chapter 13 requires debtors to repay all or some of their debts over a three to five year period. The benefit for someone facing foreclosure is that instead of coming up with a lump sum to repay all of the missed mortgage payments at once, Chapter 13 allows those back payments to be repaid over time.
Income Requirements
• A regular income is required, since monthly payments will need to be made to a Chapter 13 trustee for a period of up to five years.
• There must be sufficient monthly income left over after paying basic expenses (food, utilities, etc.) and the full monthly mortgage payment to make a payment to the Chapter 13 trustee. This will repay the missed mortgage payments, other priority debts, such as unpaid income taxes, and possibly a portion of the credit card or other debts.
Mortgage
• When someone made a large down payment or has owned the home for years, they may have considerable equity in the home. However, if someone owes more on the mortgage than the home is worth and did not make a sizable down payment, it might be better to consider past mortgage payments as rent and move on.
• Usually, the mortgage company refuses to accept payments when the loan goes into foreclosure. What happened to that money? If it was spent instead of going back into the bank account, that could indicate lack of self-discipline.
• It might be possible to “strip” a second mortgage and treat it as an unsecured debt. A portion or zero might be repaid.
Living on a Budget
While going through the three-to-five-year chapter 13 bankruptcy in St. Louis, MO, it will be essential to live on a very tight budget. Some people find themselves unable to do this for up to five years.
Van Dillen & Flood, P.C., has assisted many people save their homes by filing Chapter 13 bankruptcy in St. Louis, MO. It’s not easy, but Chapter 13 has helped many to save their homes and become financially stable. Contact the firm to discuss whether Chapter 13 would be the best solution for you.