Are You Too Far Behind on Your Mortgage for Chapter 13? Chapter 11 May Help!

12 Nov Are You Too Far Behind on Your Mortgage for Chapter 13? Chapter 11 May Help!

Padlock On HOuseMortgage lenders have been delaying foreclosures for people all over the country. Ask any bankruptcy attorney–they’ve seen cases where people haven’t made a mortgage payment for two, three, or even four years, and the mortgage company hasn’t even started the foreclosure process. Loan modifications can stretch on, court proceedings are scheduled and canceled, an unsuccessful Chapter 13, can all delay things. As a result, the mortgage arrearages–the amount you’re behind on your mortgage–can add up to a lot of money.

When you go to most consumer bankruptcy attorneys to file for a Chapter 13 repayment plan, you’re told that the plan payments will be too high for you to afford, since the full amount of the arrearage must be paid over a maximum of five years. If the arrears are $60,000, for example, this would require at least a $1,000 per month payment on top of resuming the regular monthly payment. Most people just can’t afford it.

This may result in many people thinking that they have no alternative other than losing their home. But there may be another alternative: an individual Chapter 11.

Most people don’t even know that individuals can file for Chapter 11; they think that it’s just for businesses. This is not true. In fact, my law partner, Dan Press, and I have written a book for LexisNexis about individual Chapter 11’s, Chapter 11 for Individual Debtors, and we teach other attorneys how to handle individual Chapter 11 cases. In a Chapter 11 case, there is no five-year limit on the repayment term for mortgage arrearages. In many of my Chapter 11 cases, I have obtained repayment terms of up to 30 years, without interest. In the example above, instead of a $1,000 per month payment, my client is looking at a monthly payment of $166.67. This is a lot more doable.

Chapter 11 isn’t for everyone. It is much more complex and expensive than a Chapter 13, and there aren’t a lot of consumer bankruptcy attorneys who know how to steer you through an individual Chapter 11. Make sure you find someone experienced in this aspect of bankruptcy law. The rewards can be significant.

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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