On June 24th, the Administration extended the foreclosure moratorium for a final, additional month until July 31, 2021 and the forbearance enrollment window through September 30, 2021, and provided up to three months of additional forbearance for certain borrowers.

As COVID-19 mortgage payment forbearances come to an end in the coming months, chapter 13 bankruptcy is one of the options homeowners may wish to consider.

A chapter 13 bankruptcy allows a homeowner up to five years to bring current missed payments as well as restructure other debt he or she may owe. For example, if a homeowner accepted a twelve (12) month forbearance on monthly payments of $2,000.00, then a chapter 13 plan can provide for the $24,000.00 in arrears to be paid over a sixty (60) month period.

Note that in most instances the mortgage arrears amount cannot be impaired but rather only stretched out for up to sixty (60) months. Such a chapter 13 plan allows a homeowner to retain their property for the long term.

Also, if the homeowner has other obligations such as past-due homeowners association dues, vehicle loans, credit card debt, tax debt, medical bills and student loans, those obligations can be provided for in a plan and, depending on various factors, may be impaired. The variable factors include the type of debt owed and the assets, debts, income and expenses of the debtor.

If a homeowner decides to sell their residence during the pendency of the chapter 13 case, the plan can be modified to account for that change or alternatively the case can be converted to chapter 7 or dismissed.

If a homeowner seeks to sell their residence but just needs time in order to do that, a chapter 13 plan can provide include a liquidating provision which generally limits the monthly plan payment commitment in exchange for selling property. A chapter 13 debtor is never required to sell property if they do not wish to.

Northland Bankruptcy Law offers free consultations, in person, through video or over the phone to discuss your available options. Our phone number is 816.702.1772. When consulting about chapter 13 we try to provide an estimate as to how much a monthly plan payment will be based on the information that is provided to us.

Northland Bankruptcy Law does not require the full payment of all attorney fees or cost prior to the filing of a chapter 13 case as most of those fees and cost are absorbed into the chapter 13 plan payments that are collected and disbursed by the chapter 13 trustee through the duration of the case.

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