Chapter 13 Bankruptcy

Chapter 13, also called a “wager earners” plan, allows an individual with regular income to submit a plan to the courts for repayment of debts, usually over a period of three to five years.

Most importantly, Chapter 13 allows you the opportunity to keep your home, potentially saving it from foreclosure. In fact, in most cases, filing under Chap. 13 can stop a foreclosure already in process.

Before you file a chapter 13 consult a bankruptcy attorney about your ability to file a chapter 7 bankruptcy. In many instances you may be able to file a chapter 7 bankruptcy and still retain your home.

A few questions you'll want to ask your bankruptcy attorney are:

-How many bankruptcy cases they work each month? Last year?
As in any legal matter, experience counts.

-Do they handle both Chapter 7 and 13 cases?
Find an attorney who is well versed in both chapters to better determine which may be better for your situation.

-How many attorneys do they have practicing bankruptcy law?
The more lawyers the wider the array of legal opinion and experiences available to you.

-What kind of continued legal education are they getting?
This is especially relevant with the changing bankruptcy laws.

No mortgage lender is going to ignore the fact that you’ve filed bankruptcy and he or she will likely want to know the cause of the filing. Your lender will be particularly interested in whether the same situation could happen again. Your chances of being qualified are much better if your bankruptcy was caused by a single event such as a loss of employment or a death in the family, than if it was the result of “just spending too much.”

If you are in a Ch. 13 Bankruptcy repayment plan, it is very important to make your trustee and mortgage payments in a timely fashion. You may be able to qualify for an FHA refinance in as little as 1 year into your payment plan.

For a Chapter 13 to stop the foreclosure process, the bankruptcy petition has to be filed before the trustee sale and then come up with a payment plan for your mortgage that your lender must accept.

A chapter 13 bankruptcy is a reorganization proceeding. Your debts are not completely wiped out but you are put on a payment plan.

» DISCLAIMER: The information contained in this article on 'Chapter 13 Bankruptcy' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.