The world can be terribly unforgiving. You work ten years to save up your cash so you can put a downpayment on your first home. Then you keep working so you can slowly pay off the mortgage. Twenty years later, you've got $100,000 of equity in your home and you're feeling great. Then, you lose your job and you can't pay your mortgage.
If you miss a few mortgage payments, your bank may decide to foreclose your property. Basically, no matter how much equity you have in the property, your bank can take it from you and you'll lose everything.
If you're facing foreclosure, or the possibility of getting behind on your mortgage payments, you need to act fast. There are a variety of strategies that might help you save your home, and Chapter 13 bankruptcy is one of them.
Chapter 13 bankruptcy and foreclosure
Chapter 13 bankruptcy involves reorganizing all if your debts to make payback realistic. A bankruptcy court supervises the creation of a debt payback plan that involves your commitment to paying a certain amount of money each month. This payback commitment will be based on what you can afford based on your expenses, income and your level of debt. A Chapter 13 payback period lasts either three or five years.
Once you have successfully completed the Chapter 13 payback period, and you have made all of your payments each month, the bankruptcy court will discharge any remaining debts covered by the bankruptcy. As such, you won't usually need to pay back all of the debt you owe, but rather just a portion of it.
Should you even try to keep your home?
If you're having trouble making your mortgage payments and facing the possibility of foreclosure, rather than filing for bankruptcy to try and keep your home, you might also want to consider whether keeping your residence is realistic. If you're not too far behind on payments, it might be a wiser choice to simply sell your home and buy a more affordable one. Ultimately, there are many questions you may want to think about -- and a lot of different solutions -- that could help you in your situation if you're facing the threat of foreclosure.