Bankruptcy Blog

Keep Your House In Chapter 13 Bankruptcy

               Whether your house is set for a foreclosure sheriff’s sale, or you have never been late on a payment, Chapter 13 gives you options to save & keep your house.

               Chapter 13 is a reorganization of your debts. To help reorganize, Chapter 13 allows you to package all your debt into a single monthly payment that you can spread out over 60 months (5 years). This can help reorganize a budget with amazing results.

A quick illustration of how a Chapter 13 works on to reorganize a debt: Take this simple example of a car loan: You still owe $6,500 on your car, and the car payment is $425/mo. If you file a Chapter 13 Bankruptcy, you can take the $6,500 balance and pay it off over 60 months. The math looks like this: $6,500 balance divided by 60 months = $108.33 monthly payment in the bankruptcy. This REPLACES your old car payment of $425/mo. It essentially refinances your car.

Now let’s see how Chapter 13 applies to a house

               Let’s presume the following facts for the examples: You own a house worth $150,000. There is a $125,000 mortgage on the house. $850/mo mortgage payment.

1)     Simplest Example: You are completely current on the house payments when you file your Chapter 13 bankruptcy. The Southern District of Ohio allows you to maintain your regular mortgage payment OUTSIDE of the chapter 13 Bankruptcy. This means it is essentially unaffected by the Chapter 13 bankruptcy filing. The Chapter 13 reorganizes all your other debts, and you maintain your mortgage payment by yourself.

2)     Example 2: You have fallen behind 6 months on your mortgage and the bank is considering foreclosure, or has already filed a foreclosure action. When we file your Chapter 13 Bankruptcy, the foreclosure (or any other action against your house) will stop IMMEDIATELY (yes, even 1 day before the sheriff’s sale!). The Chapter 13 Bankruptcy will take the 6 months of mortgage arrears and divide them over 60 months, along with the rest of your debts. In this example, the arrears would = 6 months x $850/mo = $5,100 mortgage arrears divided by 60 months = $85/month into the bankruptcy to catch up on the mortgage! Obviously, the regular monthly mortgage payment would still need to be paid, but this Chapter 13 stops the foreclosure immediately, then gives you 5 years to catch up on the missed payments.

Most importantly about this 2nd example is that the Chapter 13 Bankruptcy gives you a second opportunity to keep your house and become current on your own terms.

If you or someone you know has fallen behind on their house payment and needs assistance saving the house, contact me and I would love to give them a FREE consultation on how a chapter 13 bankruptcy will work for them.


-Lucas Ruffing
Bankruptcy Attorney
740-815-1114 (call/text)

Lucas Ruffing