There are several options available to you if you’re a homeowner who wants to reduce your debts through bankruptcy but still keep your home and continue making payments on your mortgage. Not every homeowner will qualify but there are some feasible possibilities that are worth considering and discussing with your attorney at a free consultation.
What is Bankruptcy?
Bankruptcy is a legal process where you ask permission from the bankruptcy courts to be able to reorganize or eliminate your debts. If they approve your application, the bankruptcy courts will temporarily give you protection from your creditors and lenders. The banks will be ordered to cease all collection and/or legal action against you while you work with your lenders and attorneys to develop and negotiate a plan to pay off your outstanding debts. Depending on which type of bankruptcy you file, your debts may be reduced and reorganized, or completely eliminated altogether.
What is a Loan Modification?
A loan modification is a process where you, your lender, and your attorney negotiate a new payment plan for your mortgage loan. This may mean lowering the interest rate, extending the loan terms, reducing the overall principal, or other tactics. The goal is to reorganize your mortgage loan so that you can realistically and comfortably continue to make the payments and keep your home.
How Are They Connected?
Depending on which type of bankruptcy you file for, you may be able to negotiate a loan modification for your mortgage at the same time. This would give you the opportunity to reduce or eliminate your unsecured debts, while focusing on making realistic payment plans for your priority debts, like house and car loans.
If keeping your home while eliminating your other debts seems like a solution you’d like to consider, please visit our Resources Center for more information or call for your free consultation.