Mortgage Debt
Your mortgage debt can be one of the more significant debts you owe, if not the largest. A mortgage also has a special meaning because it’s attached to your home. You may have heard that debts can be discharged in a bankruptcy, but you may wonder whether that would involve having your home taken away.
Unfortunately, while a bankruptcy can discharge a debt, it will not discharge a lien, meaning the lienholder on your mortgage could repossess your house. However, that does not mean there are options available to you to find relief in bankruptcy.
Mortgages and Cincinnati Bankruptcy
A mortgage requires special consideration when choosing whether to file for bankruptcy. If you are overwhelmed with debt and are considering bankruptcy in Southern Ohio or Northern Kentucky, an experienced Cincinnati bankruptcy lawyer can help you determine your options is one or more of your debts is a mortgage.
You don’t necessarily have to lose your home in a bankruptcy if there is significant mortgage debt. Eric Steiden has more than 30 years of experience helping people with mortgage debt come out of bankruptcy with as much intact as possible. Our team can help you. Call Steiden Law Offices today at for a free consultation.
Info on Ohio Mortgage and Bankruptcy
Mortgages in a Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, property is liquidated, or sold, and the proceeds are used to pay down debts until there is no more money left. The remaining debts are usually discharged, meaning they are no longer on the books and your creditors cannot come after you.
Some of your property is exempt, and will not be considered for liquidation. The equity in your home is exempt, for up to $21,625 in Ohio and up to $5,000 in Kentucky. However, just because a property is exempt does not mean the lienholder cannot foreclose.
Under law, debts must be paid in a Chapter 7 bankruptcy in a certain order. First are priority loans, including tax debts and child support payments. Next are secured debts. These are debts for which there is a security interest or collateral. Mortgages fall under this category. Last are unsecured debts, including credit card bills and medical debt.
So, if you have enough nonexempt property to liquidate to pay off your priority debts and your mortgage, you may be in good shape. Otherwise, even though your mortgage debt might be discharged, the creditor may still be able to repossess the house.
Chapter 13 Bankruptcy and Mortgage Debt
In a Chapter 13 bankruptcy, called a “reorganization,” you submit a payment plan where you pay as much as you can over a period of three to five years. The court must approve the plan. You cannot have more than $360,470 in unsecured debts or more than $1,081,400 in secured debt. Therefore, your mortgage cannot be for more than $1,081,400.
Chapter 13 bankruptcy tends to be for those who are overwhelmed by debt but are still making income. For your plan to be approved, you must be able to show you will make enough income to cover your payments. Your creditors must make at least as much money under the payment plan as they would under any other form of bankruptcy.
If you are being foreclosed upon, a Chapter 13 bankruptcy filing will stop the foreclosure. Under the payment plan, you will have to pay back any payments you missed, plus stay current on your monthly payments. Your bankruptcy attorney can help you develop a payment plan.
Fighting for Those with Mortgage Debt
If you have mortgage debt and are contemplating bankruptcy, it’s critical that you understand all your options. The right choice could mean you keeping your house. Cincinnati bankruptcy lawyer Eric Steiden assists and advises people in Southern Ohio and Northern Kentucky with mortgage debt. Call Steiden Law Offices today at to set up a consultation.
