CHAPTER 13 CAN BRING A DEFAULTED MORTGAGE UP TO DATE
Another powerful reason for filing Chapter 13 is to bring a defaulted mortgage up to date. When a mortgage gets behind, sometimes a powerful, forceful solution is needed to fix the situation. If you file Chapter 13, your mortgage company does not have a choice. The mortgage company MUST start taking payments again through your Chapter 13 plan.
HOW CHAPTER 13 TAKES CARE OF A DEFAULTED MORTGAGE
If your payments are behind on your house, you can force the mortgage company to take payments. You will pay your normal mortgage payment through the Chapter 13 plan payment. The arrears (the amount behind) must also be paid through the Chapter 13 plan. Your Chapter 13 payment amount will depend on your normal mortgage payment added on to how far behind you were on your house.
CHAPTER 13 STOPS SHERIFF SALES AND FORECLOSURE PERMANENTLY
Chapter 13 has a built in mechanism (the Chapter 13 plan) to bring a mortgage payment up to date over the course of 3 to 5 years of payments. Chapter 7 can stop Sheriff Sales and Foreclosure also – but only temporarily. Chapter 7 does NOT have a mechanism built into the process to bring a mortgage payment up to date.
Unlike Chapter 13, a Chapter 7 would require you to make a deal with the mortgage company such as a loan modification. If such a loan modification cannot be obtained in Chapter 7, you may eventually lose your home. As long as you can make the required payments in a Chapter 13, you are guaranteed the ability to keep your home and bring it back up to date.
If you have a mortgage that is behind, you may need to file Chapter 13 to stop the process of foreclosure. Chapter 13 is a very powerful way of stopping the foreclosure process. Your mortgage company will be forced to take payments and cooperate with your Chapter 13 case.