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Michael D. Hart, P.C.
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Can you lose your home when filing for Chapter 13 bankruptcy?

It is natural to think you could lose your home if you decide to file for bankruptcy. Even if you are not in foreclosure for missing payments, there can be still be worry that the bankruptcy process may cost you your home. 

Filing for Chapter 13 bankruptcy will not cause you to lose property, including your home, to the bankruptcy trustee. Though you will not lose your home during Chapter 13 bankruptcy, if you do not continue to stay current on your mortgage payments, you will go into foreclosure.

Benefits of Chapter 13 bankruptcy if you own a home

If you are currently facing foreclosure, Chapter 13 can be of help. Chapter 13 allows you to make overdue mortgage payments, which is something you are not able to do with Chapter 7 bankruptcy. With Chapter 13, you can also be helped if you have a second or even third mortgage or home equity lines of credit. There are circumstances where these can be removed during bankruptcy.

Stay current with mortgage payments

Staying current with your mortgage is vital to keeping your home during your Chapter 13 bankruptcy. With many Chapter 13 bankruptcies, you will continue to make payments directly to your mortgage lender. There are cases when a bankruptcy trustee makes a requirement that payments should be made through the Chapter 13 plan. Making the payments yourself is usually better because you will not incur fees from the trustee.

Pay off missed mortgage payments

One of the benefits to choosing Chapter 13 bankruptcy over Chapter 7 is you will be given three to five years to make up for any missed mortgage payments. This is a great benefit if you want to keep your home.

Foreclosure and automatic stay

If you have fallen into foreclosure at the time you file for Chapter 13 bankruptcy, an automatic stay will stop the foreclosure. You cannot be foreclosed on if you are current on your mortgage payments or if you make up any missed payments through your Chapter 13 bankruptcy plan.

If you are concerned about your home as you are considering bankruptcy, then filing for Chapter 13 bankruptcy might be what you are looking for.

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