If I am in anundewater mortgage will a looming foreclosure sale, what will a Chapter 13 bankruptcy do for me?

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If I am in anundewater mortgage will a looming foreclosure sale, what will a Chapter 13 bankruptcy do for me?

What am I looking at as far as total cost vs benefit?

Asked on June 18, 2013 under Bankruptcy Law, Florida

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Bankruptcy may let you escape your obligation to pay the mortgage, but will only do so at the cost of losing the house--if you want to keep the house, you'll have to continue paying the loan (though you may be able to get the lender to accept less than the amount actually currently due). You'll also take significant damage to your credit rating, which damage will last, I believe, at least 7 and up to 10 years.

The bankruptcy will temporarily stop the foreclosure (the bankrupty "automatic stay"), but will not let you indefinitely keep the house unless, as noted above, you pay the loan. Therefore, it is not likely that, in the situation you describe, that the bankruptcy will help you in any significant way. That said, bankruptcy is a complex subject and every situation is different; you are advised to consult with a bankruptcy attorney before deciding what to do.


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