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Chapter 13 May Allow You to Keep Your Home

Chapter 13 May Allow You to Keep Your Home

A substantial number of homeowners in New Jersey have taken out home equity loans to allow them to make their monthly mortgage payments but, for many in these difficult economic times, it has become nearly impossible to make payments on these loans. Filing for Chapter 13 bankruptcy may provide people in this situation with a way to keep their homes. Many homeowners in New Jersey have dreamed of owning their own home for their entire lives. Due to the high cost of homes in New Jersey many people have to take out a home equity loan to allow them to make their mortgage payments each month. A home equity loan is like a second mortgage that provides the consumer with cash and requires that a piece of property, most likely the home, serve as the security on the loan. For homeowners who, for whatever reason, find that they are unable to continue to make the payments on these loans, the bank’s repossession of the home is a very real and scary possibility. Fortunately, for individuals who find themselves in this situation there are options that may allow them to retain possession of their home. Unlike a Chapter 7 bankruptcy wherein the debtors assets are sometimes substantially liquidated, Chapter 13 bankruptcy may provide the debtor with the financial relief that they are seeking while allowing them to remain in possession of their home. Filing for bankruptcy under Chapter 13 allows a debtor to reorganize all of their debt and assets into a manageable payment plan that will permit them to more easily continue to make payments on their debts and retain their assets. The entire process is handled through the bankruptcy court. The court will create a payment plan based upon the debtor’s amount of debt and income. The repayment plan is typically set for a period of three to five years. During this repayment period, the homeowners are expected to make monthly mortgage and other bill payments to the court according to the plan. The court, not the debtor, will apply such payments to the remainder of the debtor’s loan. Ultimately, in such a situation, as long as the debtor continues to maintain their monthly payments as set forth by the court’s repayment plan, they will remain in possession of their home as they climb out of their financial crisis. For many debtors who have fallen behind on their bills a a result of illness, layoff or significant events but would now be able to meet regular monthly obligations if substantial interest and penalties for the prior late payments could be managed Chapter 13 bankruptcy is a very real possibility. If you are having trouble making your mortgage payments but would like to remain in your home it is critical that you seek the advice of experienced legal counsel to advise you on the issues concerning bankruptcy. For more information regarding Chapter 13 bankruptcy, Chapter 7 bankruptcy, foreclosure or any other consumer debt issues in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney

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