If you are struggling to pay your mortgage and deal with other financial obligations, filing for bankruptcy might be your best option. This can give you a way to address your debts and a chance to reduce your mortgage payments. Filing for bankruptcy is a big decision though, so it’s important to go into this process informed. A Montgomery County Chapter 13 bankruptcy lawyer from our firm can help with that.
Do I Have to File Chapter 13 Bankruptcy to Lower Mortgage Payments?
Chapter 13 bankruptcy is the best way to address your mortgage payments and potentially get them lowered. This type of bankruptcy allows you to restructure your debts and make a manageable payment plan.
When you file for Chapter 13 bankruptcy, an automatic stay is issued. This prevents your mortgage lender from pursuing you for payments. It also stops them from starting or continuing a foreclosure. This gives you the chance to talk to your lender about the terms of your mortgage. You may be able to negotiate a lower interest rate or a longer loan term. This can reduce your monthly mortgage payments and make your finances easier to manage.
What If I Want to Stop Making Mortgage Payments Entirely?
If you don’t want to worry about making mortgage payments at all, there is another option. When you enter into Chapter 7 bankruptcy, you liquidate assets to pay off your debts. If you want to keep your home in this process, you have to make all late payments that you owe and agree to pay on time going forward. If you do not want to keep your home, you can submit a petition saying so. Then you no longer have a mortgage payment to worry about.
What is Lien Stripping?
Lien stripping is one part of Chapter 13 bankruptcy that you can possibly take advantage of when you file. When you owe money to someone, they can place a lien on your property that prevents you from selling it without paying them back. A good example of this would be the IRS. Fail to pay your taxes and they can put a lien on your home.
If you have a second or third mortgage taken out on your home, it can be a major financial burden. In some situations, Chapter 13 bankruptcy and lien stripping can transform this debt from a secured debt to an unsecured one, meaning that you only have to pay part of this debt as a part of your overall payment plan. Then you can talk to your lender about your primary mortgage and its terms.
Schedule Your Consultation With Bankruptcy Attorneys
If you want to learn more about bankruptcy and how it could be the best way to lower your mortgage payments and get a fresh financial start, contact Mudrick & Zucker. We can schedule a case consultation and tell you more about this process.
