chapter 13 bankruptcy?

Question

Can a mortgage ever be restructured in a chapter 13? For example having your interest rate recalculated or lowered.

chapter 13 has a provision, that if your car is over 2.5 years it can be restructured where you only pay the fair market value. If you owe $25,000 and the fair is $18,000 the you pay the 18,000. I was just wondering if there is a stipulation like that for mortgages.

Answer 1

From US courts.gov:

Advantages of Chapter 13

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time. Another advantage of chapter 13 is that it allows individuals to reschedule secured debts (other than a mortgage for their primary residence) and extend them over the life of the chapter 13 plan. Doing this may lower the payments. Chapter 13 also has a special provision that protects third parties who are liable with the debtor on "consumer debts." This provision may protect co-signers. Finally, chapter 13 acts like a consolidation loan under which the individual makes the plan payments to a chapter 13 trustee who then distributes payments to creditors. Individuals will have no direct contact with creditors while under chapter 13 protection.

Answer 2

When you are in a Chapter 13 you can buy it out with the equity in your home.....thats about it. If you are in a chapter 13 why would anyone lower your rate? If you are able you could use an FHA loan to buy out of Bankruptcy and that would still give you a rate in the mid 6's. But that only works if you have made 12 trustee payments on time and your mortgage arrears (if you have any) are brought current before the refinance. So realistically, if your Chapt. 13 was due to falling behind on the mortgage then you are in trouble. But if your BK was due to other debt issues and your house payments were on time you may be able to get a pretty good loan with a good rate and get out of your BK.

Answer 3

that's something you'd need to ask your attorney about. I would think you would determine that interest rate with your mortgage company.

Answer 4

i think you can't do anything for 2 years after. you should check with your lawyer who will know the laws for your state and can better advise you... since we don't know what state you are in to better clarify our answers.