Amongst other benefits, one of the biggest advantages of Chapter 13 bankruptcies is the fact that they can help save your house. Unlike other chapters, where you may need to liquidate assets, Chapter 13 provides the opportunity to keep your house yours. Below you’ll find a guide to some of the benefits of Chapter 13, how it can stop foreclosure, and how you can even buy a house after filing.
Understanding Chapter 13
Chapter 13 bankruptcies are known as the “reorganization” chapter. They are meant for individuals with regular incomes to repay some or all of their debts over a certain amount of time. Payments are made to a trustee over a period of 3-5 years, and these trustees distribute the payments to the required creditors.
If your current monthly income is less than the state median, your plan will be 3 years, unless the court approves a longer date range. If your monthly income is greater than the state median, your plan will generally be for 5 years.
How Chapter 13 Stops Foreclosure
The biggest advantage of Chapter 13 is that the liquidation of assets is not required. Through the process of rescheduling payments for debts and financial obligations, you can extend the life of the payments through the life of the bankruptcy.
This is how Chapter 13 is able to stop a foreclosure in its tracks. It takes debts that would normally require immediate payments at the risk of losing your property, such as your home, and allows you to catch up over the 3-5 years it takes to complete the bankruptcy.
The only requirement, however, is that you must make all of your monthly payments and fully catch up on obligations by the end of your plan. If you do not, you may be switched to a different form of bankruptcy or your assets may be liquidated.
Buying a Home & Bankruptcy
There are many borrowers that assume that simply because they file for bankruptcy it means that they will either lose their home or they will be unable to purchase a home in the future. This simply is not true.
In many cases, filing for bankruptcy can actually put you in a better financial position to qualify for a home purchase when you are ready.
Chapter 13 does not disqualify you from obtaining an FHA-insured mortgage during your bankruptcy. You may be able to qualify for a mortgage loan just 12 months after your 3-5 plan.
In order to do so, you must have met 2 main requirements:
- Your payments during your bankruptcy must have all been on time
- You also must have received written permission from the bankruptcy court to begin the mortgage transaction process
With requirements as seemingly simple as these, and bankruptcy filer may be far closer to buying a home than they think.
Contact Our Georgia Bankruptcy Team Today
The home is precious. It may be the one place where you and your family are able to feel safe and secure day in and day out. When that place is at risk of being taken away from you, it can only lead to cause stress, anxiety, and many sleepless nights.
At Holston & Huntley, we are committed to providing a personalized and compassionate approach for every client that chooses to work with us. We have met head-on, almost every financial struggle, and handled over 1,000 cases, putting our experienced team in the best position to help you succeed.
If you are at risk of losing your home, you don’t have to go at it alone. If you have questions about whether Chapter 13 can help stop the foreclosure of your home, do not hesitate to contact us today through our website or give us a call at (404) 620-3337!