Chapter 13 bankruptcy and home foreclosure

| Apr 24, 2015 | Chapter 13 Bankruptcy |

Individuals in Texas who have filed for Chapter 13 bankruptcy may wonder what to do if they find that they still cannot make payments on their mortgage. There are two solutions available if an individual no longer wishes to continue making house payments in this situation.

Usually people file for Chapter 13 bankruptcy because they are ineligible for Chapter 7, but an individual might also do so in order to keep some assets. In a Chapter 13 bankruptcy, debts are restructured so that an individual pays them back over a period of three to five years. The individual who wishes to walk away from a home should first find out if they are eligible to switch to Chapter 7 bankruptcy.

If this is not possible, the individual also has the option of simply ceasing to pay the mortgage. Eventually, it will be removed from bankruptcy protection. However, the process offoreclosure may be a long one. In the meantime, an individual may be able to remain in the house until it is sold.

A person who is struggling to make mortgage payments and meet their other financial obligations may want to consult an attorney to find out if bankruptcy might be a debt relief alternative. An attorney may also be able to explain the eligibility requirements for both Chapter 7 and Chapter 13. Some people may worry that a bankruptcy means that they have been irresponsible or that they will have trouble ever getting loans or credit again. However, with both Chapter 7 and Chapter 13, debtors can begin rebuilding their credit soon after the bankruptcy is finalized. A Chapter 7 bankruptcy falls off the credit record entirely after 10 years and after seven years for a Chapter 13.