An underwater mortgage is a term that refers to owing more money on the house than the amount it is worth. If you owe $200,000 on your home, but it is worth just $150,000, you have an underwater mortgage. If you have this problem, you may have other financial issues, too.
When you face this situation, you could consider Chapter 13 bankruptcy. Chapter 13 can help with underwater mortgages and many other issues, and here are a few things to know about how it works.
It Provides a Way to Stop a Foreclosure
Many homeowners that are in this position find that they fall behind on their payments. If you have not yet fallen behind, you might in the future. When this occurs, you face the risk of a foreclosure on your home. If you do not want this to happen, using Chapter 13 could help.
Once you file for it, the court will force your lender to stop the foreclosure process. If you are not yet in foreclosure, the court will stop your lender from starting the process. Chapter 13 helps you keep your house. If you face the risk of losing it, this branch can help.
It Removes Junior Liens
One of the best parts of using Chapter 13 is the way it handles junior liens. A junior lien refers to a second or third loan you have on your home. If your house value is worth less than the amount you owe for these other loans, Chapter 13 will wipe them away. The process used to wipe away these loans is called lien-stripping. If you want to owe less on your house, this is the way to go.
It Offers a Payment Plan
Finally, when you use this branch of bankruptcy, you get a new payment plan. The payment does not only cover your house payment costs, though. It also covers all the other debts you have, including credit cards, medical bills, and car loans. It can include almost any other type of debt, too. Getting a new payment plan will help you afford your bills and keep your home.
If you owe more on your home than what it is worth, you will likely have trouble repaying it and keeping it. You can find relief through Chapter 13, though, and it might be worthwhile for you to check this out. To learn more, call a bankruptcy law firm, like Martinez Law Firm, to set up a consultation visit.Share
16 March 2020
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