Don’t Qualify For A Chapter 13 Bankruptcy But Still Want To Save Your home From Foreclosure? There is still hope.
It is possible that you tried and failed to get a loan mod, and then also discovered that a chapter 13 bankruptcy was not a good option for you. But, there may still be one more option left if you want to save your home from foreclosure.
The main factor that would hold you back from being eligible for a chapter 13 bankruptcy is having too much consumer debt. Certain qualifiers stipulate the amounts of secured and unsecured debt that you’d have to pay if you want to enter into a chapter 13 bankruptcy. If you have too much unsecured debt, i.e. medical debts, payday loans, credit card debts, then you may still be able to get a chapter 13 bankruptcy, and here’s how…
First You File For A Chapter 7 Bankruptcy, Then You File For A Chapter 13 Bankruptcy
This tactic is called the “chapter 20 bankruptcy”. By filing for a chapter 7 bankruptcy first, you can eliminate 100% of your unsecured debts, which were holding you back from making a chapter 13 bankruptcy work for you.
To learn more about when a chapter 7 bankruptcy is used, read our post: When Is A Chapter 7 Bankruptcy Useful?
Once the chapter 7 case is completed, you can file for a chapter 13 bankruptcy which will then allow you to catch up on missed mortgage payments through a repayment plan.
This repayment plan will take place over a 60 month period during which you will make 60 equal payments to pay back all of your arrears (missed payments). While paying back your missed payments, you are also paying your normal monthly mortgage payments.
Once your in a chapter 13 bankruptcy plan, you may also then be eligible for a loan modification to reduce your monthly payments. A loan modification could lower your interest rate and adjust your term.
To learn about how a chapter 13 bankruptcy could save your home, read our post, How Does Bankruptcy Help Save My Home In Foreclosure In New Jersey?
All Of Your Problems Solved With A Chapter 20 Bankruptcy
So… you started out not qualifying for a loan modification, nor a chapter 13 bankruptcy, but by doing a chapter 20 bankruptcy, you have solved all of your debt problems and saved your home!