Falling behind on your mortgage payments can be a stressful and overwhelming experience. The good news is that you may have options to get back on track. Two common options are filing for Chapter 13 bankruptcy or enrolling in a mortgage modification program. But which option is better? In this blog, we’ll discuss the differences between the two and help you make an informed decision.
Chapter 13 Bankruptcy:
Chapter 13 bankruptcy is a legal process that allows you to reorganize your debts and pay them back over a 3-5 year period. This option can help you catch up on your mortgage payments and keep your home. Your mortgage arrears will be included in your Chapter 13 repayment plan, and you’ll make one monthly payment to a trustee who will distribute the funds to your creditors, including your mortgage lender. One of the benefits of Chapter 13 is that it provides an automatic stay. This means that creditors, including your mortgage lender, must stop all collection activity once you file for bankruptcy. This will buy you some time to catch up on your mortgage payments while staying in your home.
A mortgage modification program is a voluntary agreement between you and your mortgage lender to modify the terms of your existing mortgage. This option may lower your monthly mortgage payment, lower your interest rate, or change the length of your mortgage term. However, not everyone qualifies for a mortgage modification, and the process can be long and complicated. The lender is not obligated to modify your loan, and some modifications may not offer significant savings.
Which Option Is Better?
The answer depends on your individual circumstances. If you have other debts besides your mortgage payments and need to restructure your finances, Chapter 13 bankruptcy may be a better option. If your only financial problem is your mortgage payments, and you can demonstrate that you can afford the modified payments, a mortgage modification may be the better option. It’s important to consult with a bankruptcy attorney to determine which option is best for you.
If you’re struggling to make your mortgage payments, you have options. Chapter 13 bankruptcy and mortgage modification are two popular alternatives. Both options have benefits and drawbacks. If you’re considering either option, it’s imperative to consult an experienced bankruptcy attorney. They can help you weigh the pros and cons and determine which option is best for your unique circumstances. Remember, bankruptcy and mortgage modification may not be the ideal solution for everyone, but exploring all your options is the first step to regaining control of your finances.