Using Chapter 7 and Chapter 13 bankruptcy to modify mortgages

June 21, 2013 6:15 pm Published by

New Yorkers who have some unsecured debt and are behind on their mortgage may be able to file for Chapter 7 bankruptcy targeted towards their unsecured debt. This will allow the individual to remove unsecured debt without otherwise affecting their mortgage loan. However, the individual or household will not necessarily be able to modify their mortgage loan on this basis, which means that they may need to figure out a way to catch up on any unpaid mortgage payments.

One way that a person may be able to do this is by filing Chapter 13 bankruptcy directly after their Chapter 7 bankruptcy. Chapter 13 bankruptcy allows a person to enter into a structured payment plan to resolve any old debts. A household will not have remaining debt after filing Chapter 7 besides their mortgage payments, so the Chapter 13 bankruptcy will only affect the bank balance that they owe on their mortgage payments. However, this method does come with some risk.

When using Chapter 13 bankruptcy to manage past mortgage payments, the homeowner will have to pay both the payment plan and their existing mortgage payments. If the homeowner was already having difficulty making their mortgage payments, then this plan may not be feasible. However, if the homeowner can begin making payments through Chapter 13 bankruptcy, many mortgage lenders will be more willing to modify their mortgage or help them with a plan.

Many New Yorkers may be struggling with debt right now and considering Chapter 7 bankruptcy. Chapter 7 bankruptcy may dissolve many forms of debt, but there are certain types of debt, such as student loans, that may not be discharged. A bankruptcy law attorney may be able to help someone determine which type of bankruptcy is the best option for them and what the consequences of the bankruptcy will be.

Source: Fox Business, “Will Bankruptcy Help Mortgage Modification?“, Justin Harelik, June 11, 2013

facebooktwittergoogle_pluslinkedinmailby feather
Free Debt Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Associations & Memberships:
  • New York State Bar Association
  • National Association of Consumer Bankruptcy Attorneys
Rock County New York | Town of Stony Point | Town of Haverstraw | Town of Ramapo | Town of Clarkstown | Town of Orangetown

Ugell Law Firm, P.C.
151 North Main Street , 2nd Floor :: Suite 202 :: New City, NY 10956
Phone: 845-521-7841 :: Telephone: 845-213-1250 :: New City Law Office Map

Se Hable Español

Rockland County Bar AssociationMax Gardener's Bankruptcy Boot Camps | Lizmere South Mountain FarmNew York State Bar AssociationNational Association of Consumer Bankruptcy Attorneys