An Effective Way To Bring Your Mortgage Current in Ohio

When it comes to finding a flexible, cost-effective way to bring your mortgage back to current status and prevent foreclosure, there are few options more beneficial than those offered by Chapter 13 bankruptcy protections.

The Advantages of Chapter 13

Standing in stark contrast is the Chapter 13 process, which provides a great deal more flexibility, time and freedom to keep your home safe from foreclosure and to bring mortgage payments current.

Rather than the arbitrary payment amount decided by the lender, your own financial circumstances will dictate how much will be devoted to catching up on mortgage payments. Your payment period may be extended up to five years. If your debt obligations in other areas are significant, it may even be possible to postpone or reduce the payments due to your home lender. Adjustments can often be made along the way as well, if financial circumstances change.

The flexible nature of the Chapter 13 payment plan increases the likelihood of ultimate success in curing your mortgage and keeping ownership of your home.

Your Role in the Process

It must be noted that unless you keep your end of the bargain in a Chapter 13 plan, you may forfeit the tremendous benefits it can afford. As such, you must commit to:

1. Staying current on the approved payment plan. Mortgage catch-up amounts will be blended into the overall monthly debt repayment plan, and if you fail to keep this obligation, the home lender can seek permission to begin foreclosure proceedings. Further, your entire bankruptcy case could be dismissed if you do not make timely payments.

2. Keep making regular payments on your mortgage. While Chapter 13 lets you gradually pay down prearranges, letting yourself get further behind can put the success of your plan in real danger.

3. Stay current on your homeowner’s insurance payments and never let the policy lapse. Mortgage lenders may decide to “force-place” insurance, requiring you to pay what may be a significantly higher cost that you are unable to afford. Also, if your insurance policy lapses, a lender may be permitted to initiate foreclosure proceedings.

4. Make all property tax payments as they come due. Delinquent property taxes is yet another reason the lender may seek and be granted permission to begin foreclosure. However, the payment plan you structure with the help of a bankruptcy attorney will help ensure that this does not occur.

Differences Between Chapter 7 and Chapter 13

In terms of consumer bankruptcies, the primary options are Chapter 7 and Chapter 13 filings. Most Chapter 7 matters require just a few months from start to finish. However, a Chapter 13 matter typically requires anywhere from 3 to 5 years to complete. While this may seem daunting at first glance, the fact is that Chapter 13 provides a series of advantages that Chapter 7 does not.

Perhaps the most significant benefit of Chapter 13 is that it affords you a 3-5 year time period in which you can bring your mortgage back to current status by way of a court-authorized payment plan which also keeps your home safe from foreclosure.

Why Chapter 7 May Not Be A Fit For This Route

For those who are already behind on their mortgage, Chapter 7 can be a risky proposition in terms of protecting the home.

A Chapter 7 case provides protection for only the short period of time it takes for the case to be concluded, and this can sometimes be just a few months. In the interim, it may be possible to negotiate a forbearance agreement with the lender that spells out the conditions for bringing the mortgage back to current status.

The downside is that a borrower will not have much in the way of bargaining power under such circumstances. Lenders may offer only a couple of months, perhaps up to one year to bring payments current, and this may be insufficient for those who have fallen well behind on their payments. Once a Chapter 7 case has been discharged, the lender is free to restart or initiate foreclosure proceedings. Lenders often demand large catch-up payments that Chapter 7 debtors have a difficult time keeping current, increasing the chances of ultimate failure.