Keeping Your Home and Filing for Chapter 13 Bankruptcy

The possibility of losing one’s home is a frightening prospect. One major question in regards to bankruptcy is, “can I keep my house after declaring bankruptcy?” The answer is yes. An individual can file for a chapter 13 bankruptcy and stop foreclosure proceedings against their home.

A chapter 13 bankruptcy is commonly referred to as the wage earner’s plan. Under a chapter 13 bankruptcy, the debtor works out a repayment plan to pay off outstanding debts. Chapter 13 proceedings will put an automatic stay on foreclosure proceedings and collection actions. The individual can then attach the delinquent payments to the bankruptcy. These payments will be repaid during the payment plan.

In order to save your house, it is important to keep up with the payment plan. Filing for chapter 13 bankruptcy does not relieve you of the total cost of your mortgage. You can still lose your home if you fail to make the regular monthly mortgage payments that are due after you file for bankruptcy. In addition, if the mortgage company completes the foreclosure process prior to the filing of Chapter 13, you will lose your home.

When filing for chapter 13 bankruptcy, you will have to file a petition for chapter 13 bankruptcy with the court along with the appropriate paperwork documenting all of your assets, liabilities, income and additional financial information. In addition, the debtor must file a valid certificate showing completion of an approved credit counseling session. Once the petition is filed, the trustee will hold a meeting with all the creditors and the debtor. A plan will be drafted outlining the details of the repayment plan. This plan must be submitted to the court for approval. This plan will be a biweekly or monthly payment plan with a fixed monetary amount. This payment plan can range anywhere from three to five years.

All payments will be made to the appointed trustee. The trustee will then distribute the money to all the creditors based on the plan. Once all payments have been made, your debts will be discharged. A discharge will release the individual from all debts filed under the bankruptcy regardless of whether the full amount of the debt was paid. You will most likely have to continue paying your mortgage even after your payment plan has completed if you want to still keep your home, as a Chapter 13 doesn't necessarily rid you of all your mortgage obligations.