Can Chapter 13 Bankruptcy Modify My Mortgage?

When you have trouble making mortgage payments, only your lender can make modifications to your mortgage. One exception is when the homeowner has filed for Chapter 13 bankruptcy, which generally allows for the petitioner to repay their debts over a span of three to five years. Continue reading to learn more about the two ways your mortgage could be modified in a Chapter 13 bankruptcy.

Cramdown

A cramdown is an attractive option for modifying your mortgage, as it requires you to repay only what your property is worth. Any remaining balance will be discharged with the rest of your debts. Unfortunately, few meet the requirements for a cramdown, as your mortgage will need to have been secured through more than just your home, such as your vehicle, stocks, and other assets.

Lien Stripping

When you owe more on your home than it’s worth, and you’ve previously taken out a second mortgage, lien stripping could be a good option for you. Here, you’ll strip the lien on your second mortgage and repay that, along with all of your other unsecured debts, as part of your repayment plan

The catch with lien stripping is that selling the home offers no way to repay the second mortgage, which means that when your home is sold, the proceeds will go toward your first mortgage, and you’ll have nothing left to repay the second mortgage. For this reason, you can strip only second and subsequent mortgages when seeking a mortgage modification. 

Work with an Indiana Chapter 13 Bankruptcy Lawyer

For assistance modifying your mortgage while declaring bankruptcy, get in touch with a qualified Indiana Chapter 13 bankruptcy lawyer at Rowdy G. Williams Law Firm. We provide free consultations to individuals across the state who are struggling financially. 

Take advantage of this opportunity by calling our office at 1-812-232-7400 or by completing the online contact form located at the bottom of this page.