Posted on 02 28,2015

If you have fallen behind on your mortgage payments and need some time to get back on track, your first step is usually to communicate with your mortgage company and to find out how they can help you. Your lender may be able to help you get your mortgage caught up, perhaps by offering you a forbearance or a loan modification. You can also get free counseling about your options through the government. Click here for a list of HUD-approved nonprofit housing counselors in Virginia.

But at some point you may find that the mortgage company is not willing to work with you or offer you enough assistance and you worry you are headed for a foreclosure. Even if they have stopped accepting your mortgage payments or already started the foreclosure process, it is not too late to get the time that you need to catch up.

A bankruptcy can help you in several ways. Filing for bankruptcy will stop a foreclosure from taking place, and give you some space to sort out your options because the mortgage company cannot start the process again without court permission. At the same time, it will put a stop to any debt collection activities such as garnishments that are stampeding your budget.

Of the two common bankruptcy chapters, a Chapter 13 bankruptcy is the best tool for saving your home as it will give you three to five years to catch up the arrears on your home, while providing relief and protection from your other debts. You will be able to resume making the regular mortgage payments and make an additional monthly payment through the bankruptcy plan that goes towards catching the arrears up. While you are steadily getting caught up, you are protected from foreclosure. At the same time, your other debts are managed and restructured, and most debts are written off for a small fraction of what you owe.

The Chapter 13 repayment plan also allows you to catch up arrears on other debts against your house such as real estate taxes and home owner's association dues in the same way.

A Chapter 13 may even allow you to remove a second mortgage from your home. If you can prove that your home is worth less than your first mortgage, the second lien can be removed through the bankruptcy and treated as ordinary dischargeable debt. That will make your home much more affordable by permanently removing one of your monthly payments.

A Chapter 7 bankruptcy can help if you are current or almost current on your mortgage, but you know that you cannot continue keeping up with the payments while also dealing with all of the rest of the debt you owe. By wiping out all of your other eligible debt, you will be able to focus on your mortgage without dealing with the threat of garnished wages or bank accounts.

If you are struggling with your mortgage and you would like to know more about your options, we offer free consultations with our experienced bankruptcy attorneys. Do not hesitate to contact our office today.

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