House with a foreclosure signThis is the next post in my series on how chapter 13 bankruptcy can assist “sub-prime” borrowers in Nebraska. My last two discussions dealt with how Nebraska residents can use chapter 13 to cram-down their auto loan and additional benefits achieved through chapter 13. In this article I will be addressing an issue that is still plaguing many Nebraska residents – how to save their home from foreclosure.

Using the chapter 13 process to stop a foreclosure in Nebraska

Chapter 13 bankruptcy can prevent the foreclosure of your home and allows you to become current on your mortgage. If you are behind on your mortgage, and you file a chapter 13 bankruptcy petition, then two things will happen. First, an “automatic stay” is put in place. This prevents the bank from foreclosing on your home as long as you continue to make your regular monthly mortgage payments. Second, the amount in which you are behind on your mortgage will be caught up through your chapter 13 payment plan, which may be a length of up to five years. Filing for bankruptcy is often the best option for many people wishing to save their homes.

I’ve spoken with many Omaha, Nebraska residents who feel like bankruptcy is not an option. Many believe that if they cannot make their payments now then they would not be able to make a chapter 13 payment to catch up their arrears. The truth is, however, that quite often chapter 13 will reduce one’s monthly obligations in other areas. This reduction of obligations can result in the chapter 13 payment, which includes your past due mortgage amount, being less than what you are currently paying on debt each month. In many situations, you have more money left over at the end of the month by reorganizing your finances through the chapter 13 process.

Home owners in Nebraska must continue to make their mortgage payments through the duration of a chapter 13 bankruptcy

It is important to understand that filing for bankruptcy is not a “get out of jail free” card in regards to your mortgage. You will be obligated to make the payments on your existing mortgage. If you do not make your mortgage payments then the lender will have a right to foreclose on the home. In Nebraska, your mortgage payments will continue to be made directly to your lender; the past due mortgage amount will be paid through your chapter 13 plan.

The Omaha area, and Nebraska in general, continues to feel the impact of the mortgage collapse. In 2014 there are still many “sub-prime” borrowers who have income and could save their home if they were given the chance to do so. As an experienced bankruptcy attorney, I regularly deal with people in this situation and they are surprised to learn of the options available to save their home. Contact my Omaha office today to schedule your initial consultation.