Foreclosure – Don’t Panic – Option Number 3 & 4 – Chapter 7 & Chapter 13
File for Chapter 7 Bankruptcy
If you are current on your mortgage, Chapter 7 may be a good option because it is relatively quick and inexpensive. Chapter 7 will allow your mortgage payments to be more affordable and therefore prevent foreclosure in the long run by eliminating your unsecured debt.
Chapter 7 bankruptcy will wipe out your unsecured debt, such as credit cards, medical bills, and personal loans. The net effect of wiping out your unsecured debt allows you plenty of money to pay your secured debts, i.e., mortgage and car payment.
File for Chapter 13 Bankruptcy
This is a great option if you have a fairly stable income and you can afford a Chapter 13 repayment plan. Chapter 13 allows you to repay your missed mortgage payments over the life of your repayment plan which will allows you three to five years to get back on track.
You will end up only paying a fraction of your unsecured debt, such as credit cards, medical bills and personal loans. You may be able to “cram down” your car payment and end up payment the fair market value of your car today as opposed to the balance on your car loan.
Last but not least, you may be able to “strip off” your second mortgage on your home if the value of your home has decreased and the second mortgage is unsecured.
Take care and good luck.
Stephen M. Dunne, Esq.
Dunne Law Offices, P.C.
1500 JFK Blvd, Two Penn Center, Suite 200
Philadelphia, PA 19102