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Using Chapter 13 to avoid foreclosure

Lehighton residents who are struggling to pay their bills can feel overwhelmed and frustrated. Just when you think you're doing OK, another bill arrives and you're behind again. Or an unexpected expense pops up, like medical bills or a car needs to be fixed. Regardless of how a person got to this situation, when a house is at risk of foreclosure, Chapter 13 bankruptcy protection may be able to help.

Owning a home is a privilege and a right for those in Lehighton. Home ownership is a source of pride for many residents. But sometimes good people can fall behind on their bills, including their mortgage. When this happens, the mortgage lender may place the home in foreclosure. If this is the case for a Lehighton resident, filing for Chapter 13 bankruptcy protection offers some advantages. First, the automatic stay when Chapter 13 is declared stops the foreclosure sale from taking place. A Chapter 13 case also forces lenders to accept overdue payments over time. In the case of a mortgage, the amount that is overdue is paid back over the life of the Chapter 13 plan. This can help a person pay back what is overdue and still be able to make their monthly mortgage payments.

Also, if a person has two mortgages out on their home, a Chapter 13 declaration can strip the second mortgage. This means that if the value of the first mortgage is more than what the house is worth, the second mortgage is considered unsecured debt. That second mortgage debt is then paid pro rata with the rest of the unsecured debt and is only paid by what a person can afford. The remaining debt is removed which can save a person thousands of dollars.

When a person is behind on their bills it can be difficult to catch up. A job loss or unexpected bills can turn a family upside down in debt quickly. No one wants to lose their home to foreclosure and Chapter 13 bankruptcy relief can help.

Source: findlaw.com, "Facing foreclosure? How bankruptcy can help", accessed on Dec. 7, 2017

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