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Bankruptcy Home Loan Saved Only Through Chapter 13 by Larence Hubert
In cases of homeowners filing a Chapter 7 bankruptcy, most likely they are going to lose their home. The court typically will order the home sold with the proceeds going to the lender holding the mortgage and, if there is anything left over, the money would go to secondary lenders involved in any claims against the debtor. Many times when people are behind in their mortgage payments as well as many other debts they may hope to reclaim their finances by filing for Chapter 13 bankruptcy. They, with the help of an attorney, can file a payment plan with the federal bankruptcy court to pay off their creditors over a period of three to five years. Under this plan they may keep their home, car and other items held as collateral on the loans. However, the only amounts placed into the court payment plan are past due payments. The petitioner will still have to make the regular payments on the home loan while paying off the past due payments to maintain possession. If they default on the payment agreement through the court, the home will go into foreclosure and the individual will usually end up filing for Chapter 7 bankruptcy relief. However, the payment plan submitted to the court in a Chapter 13 bankruptcy filing will not be approved unless the petitioner shows that they have sufficient income to make the payment to the court trustee every month while still paying for all other approved living expenses. Failing to show that, the individual may be advised by their attorney to consider Chapter 7. Even after filing for bankruptcy, mortgage loan companies may still seek you out and court you with attractive sounding offers. Too many times an individual may fall for their advertised rates only to realize - in the aftermath - that they have just committed to a loan with highly dangerous terms which, if not gotten rid of in time, may quite possibly lead them into a financial situation direr than the one they just left behind. What makes debtors so attractive after bankruptcy, mortgage loan companies openly confess, is that this is an underserved market of individuals who are eager to once again get on their feet and redeem themselves in their own eyes and in the eyes of society. A home purchase is of course the ultimate status symbol in this regard, and it is therefore not surprising to find that many a fresh baked "new starter" is home shopping. Yet what these individuals fail to notice is the fact that in spite of their best intentions they are falling victim to loan schemes with sky high interest rates, steep prepayment penalties, frequently adjustable rates, and overall will also be saddled with the necessity of paying high lender fees. Too often they may find themselves in a great spot financially, only to see their new vantage point slipping away when adjustable rate mortgages adjust and balloon payments come due. Therefore it is wise to read through the offer in its entirety and - if the mortgage terminology sounds like a technical treatise on underwater basket weaving - in case of a doubt have a trusted third party take a look at the documents.
Source: Bankruptcy Attorneys http://www.goarticles.com/cgi-bin/showa.cgi?C=776022
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