Protecting your Home in Chapter 13 Bankruptcy

If you have fallen behind on your mortgage, you are far from alone. Americans across the country are having difficulty paying their mortgage as many struggle with being quarantined due to Covid-19. If you’re behind on your mortgage, there are multiple ways to catch up.

Protecting your home is one of the main reasons people file for Chapter 13 bankruptcy. This type of Bankruptcy allows you to continue living in your home and avoiding foreclosure by either 1) entering into a loan modification with your lender; or 2) curing the arrearage on your mortgage and maintaining the regular payments through the Chapter 13 Plan.

The most important thing to remember when filing Chapter 13 is that you must timely comply with all of your obligations under your Chapter 13 plan in order to save your home. These tips will help ensure your home is protected in your Chapter 13 bankruptcy.

Educate Yourself

The first thing you need to do when you choose to file a Chapter 13 is to read your Chapter 13 plan and know what your obligations are. It is important to sit down with an experienced Miami Bankruptcy Attorney to craft a plan that will accomplish all of your goals.

The Plan that you and your Attorney draft and file with the Bankruptcy Court will require that you begin making plan payments thirty days after you file your case. It is important to know when to start making plan payments so that the Chapter 13 Trustee does not request dismissal of your case.

The Plan payments will partly consist of mortgage arrears payments – missed payments and your ongoing regular mortgage payments. You will be making plan payments to the Chapter 13 Trustee who will then disburse these funds to your mortgage lender. It is important to know which Trustee you are required to make payments to and the form of payment the Trustee accepts.

Keep Records of Payments You Have Made

It is important to maintain detailed records of everything related to your bankruptcy such as all of your payments that were made to the Trustee. Typically the Trustee’s only accept cashiers’ checks or money orders and keeping all of these records can become cumbersome. It’s a good idea to pay the Trustee via TFS Bill Pay or other similar electronic means. These services cost the same as purchasing a money order but give you the ability to make your payments from the comfort and privacy of their own home.

Be Aware of Payment Changes

One of the things you need to watch for is changes in your Chapter 13 Plan payments. Oftentimes, your mortgage payment fluctuates due to changes in escrow which in turn, increases your Chapter 13 plan payments. Depending on how you and your bankruptcy attorney have structured your plan, there might be a small boost in payment due to escrow or insurance. You’ll need to make sure you are paying the right amount every month or you could fall behind.

Make Sure Property Taxes Get Paid on Time

As many already know, mortgage payments are not your only obligation when you own your own home. You also need to be vigilant that your annual property taxes remain current. Sometimes these other obligations are escrowed into your mortgage payment, but not always. You also need to make sure home owner’s insurance is timely paid or your mortgage lender can either force place insurance or ask the court to lift the automatic stay against you in order to move forward with their foreclosure efforts.

If you’d like more tips for Protecting Your Home in Chapter 13 Bankruptcy or you have bankruptcy questions about filing, contact a Miami Bankruptcy to discuss your situation.

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