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Using Chapter 13 to protect the family home

A family in Carbon County may have several reasons to consider filing a Chapter 13 bankruptcy in the event they fall on financial hard times. As this blog has mentioned previously, a Chapter 13 bankruptcy is a bit different than the more common Chapter 7 in that it requires a debtor to get the court's approval of a repayment plan. After following through on the repayment plan, a family will be discharged from any outstanding debt.

Even though the process is faster and a bit simpler, one disadvantage to filing for Chapter 7 bankruptcy is that Chapter 7 cannot protect a Pennsylvania family's home in the long term. As with all bankruptcies, a family will normally get temporary relief while the bankruptcy is pending, but the lending institution holding the family's mortgage can elect to simply wait out the proceedings and then go ahead with foreclosure. While the bank may not be able to pursue the family on a personal level, the bank can still take the home.

In Chapter 13 bankruptcy, however, a family has the option of including the delinquent balance on their mortgage as part of a repayment plan. What this means is that, as part of their plan, they agree to pay the regular mortgage payment each month but also agree to chip in a little extra until they are caught up on the loan. At the end of a successful Chapter 13 bankruptcy, a family will not owe back payment on the mortgage and will, thus, be out of danger of foreclosure.

If you have questions regarding your debt and wonder whether bankruptcy would suit your needs, you may wish to contact an attorney to discuss your options.

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