Using A Chapter 13 Bankruptcy To Cure A Mortgage Delinquency

Using A Chapter 13 Bankruptcy To Cure A Mortgage Delinquency

Unforeseen events can have devastating consequences for anyone. Life can be moving along in a planned, orderly fashion, and one event can change everything. One of the most potentially devastating events can be anything that causes a homeowner to fall behind on a mortgage. The idea that a family’s source of shelter and symbol of stability may be taken is potentially a life-altering event. However, homeowners that are delinquent have options to save their home. Filing a chapter 13 bankruptcy case can help homeowners recover and save their homes.

Granted, not everyone who is behind on their mortgage has experienced some unusual, unexpected event. Homeowners may also get behind on their mortgage because of overspending and failing to abide by a budget. However, if difficulties making the monthly mortgage payment is the result of a loss of income or increase in expenses that is only temporary, a chapter 13 bankruptcy case can potentially help cure the delinquency and restore the account.

One of the first chapter 13 cases I remember, involved a married couple with two children. The husband worked as a butcher at Safeway, and the wife worked as an elementary school teacher. Both regularly earned an amount of income from wages that was more enough to pay their monthly expenses.

One day, their dog bit a neighbor, who filed a civil lawsuit, sued them for damages and was awarded a money judgment. Suddenly, they were legally obligated to pay an excessive damages award without sufficient insurance. This eventually caused them to miss several mortgage payments despite the fact that they were still working full-time. Their lender then decided to initiate foreclosure proceedings even though they regained the ability to make their mortgage payment each month.

They filed a chapter 13 bankruptcy case. They scheduled the payment of their mortgage arrearages in their chapter 13 plan of reorganization. They were able to resume making their regular monthly mortgage payment and pay the mortgage arrearages, which were divided into 60 payments in their plan of reorganization.

But the case didn’t even last that long as the debtors refinanced their mortgage, became current, and returned to their normal life soon thereafter. A chapter 13 bankruptcy case bought them the time to reorganize and adjust their mortgage arrearages.

The Morrison Law Group is deeply committed to providing the highest quality client experience, which includes helping debtors ease through the bankruptcy paper trail. Call 801.456.9933 to schedule a FREE consultation. We have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas. No matter what your financial situation involves, the attorneys at the Morrison Law Group may help you understand all of your options and place you firmly on the path to financial freedom.

Using A Chapter 13 Bankruptcy To Cure A Mortgage Delinquency

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Theron Morrison

Utah’s top bankruptcy and consumer protection attorney.