It is an unfortunate realization that your home has lost its equity and that you now have an underwater mortgage. However, there may be a way that you can remedy this. Continue reading to learn how a Chapter 13 bankruptcy filing can relieve your underwater mortgage and how an experienced Louisville, Kentucky Chapter 13 bankruptcy lawyer at Schwartz Bankruptcy Law Center can walk you through this.
By definition, what is an underwater mortgage?
First of all, an “above water” mortgage is one in which a home has enough equity to cover all loans and debts in the event that the homeowner sells it. However, sometimes there is such a thing as an “underwater” mortgage. This occurs when a home does not have enough equity to cover all loans and debts in the event that a homeowner sells it.
Unfortunately, you may find yourself having an underwater mortgage if you purchased your home at a price that was well above its actual value, and you now owe more than it is worth. Or, maybe you had to take out a second mortgage for your home, or otherwise, you got caught in a financial hardship that caused you to fall behind on your mortgage payments. Any of these circumstances can cause your home to lose equity.
Is it possible for a Chapter 13 bankruptcy filing to help with my underwater mortgage?
Put simply, a Chapter 13 bankruptcy is a type of bankruptcy that may allow you to keep all your assets under the protection of the bankruptcy court. In the meantime, the court may order that you create a comprehensive repayment plan, which will outline how you will restructure your debts and pay them off within the next three to five years. This repayment plan may include your car loans, credit card bills, and most importantly, your mortgage payments.
With that being said, it is possible for a Chapter 13 bankruptcy filing to relieve your underwater mortgage. That is, the repayment plans may allow you to schedule out your mortgage payments in a way that better suits your current financial situation. And so, you may be better on track to paying off your mortgage and regaining the equity in your home. What’s more, if you have a second mortgage on your home, your Chapter 13 bankruptcy filing will consider this an unsecured debt that no longer requires monthly payments. This will further your ability to pay off your first mortgage and regain equity.
Overall, a Chapter 13 bankruptcy filing can help you avoid the foreclosure of your home. So if you are interested in this, find out more information by reaching out to a skilled Louisville, Kentucky consumer bankruptcy lawyer today.
