Individuals in Pennsylvania who are filing for Chapter 13 bankruptcy may wonder what will happen if they find that they still cannot keep up their mortgage payments. Usually, people file for Chapter 13 bankruptcy when they make too much money to file for Chapter 7.
In a Chapter 13 bankruptcy, individuals have their debts restructured to pay them back to a bankruptcy trustee over three to five years. A home is usually among the assets these individuals are able to keep. The trustee then distributes those payments to creditors. In a Chapter 7 bankruptcy, most unsecured debts are discharged, but an individual still may keep their home and vehicle in some case. If an individual in involved with a Chapter 13 action but is eligible for a Chapter 7, they may want to switch to a Chapter 7 bankruptcy and walk away from their home.
An individual who is ineligible for a Chapter 7 bankruptcy can still walk away from the property. By ceasing to pay the mortgage, the home will be removed from bankruptcy protection and foreclosed upon. This process may take some time, and the individual may be able to remain in the house until it is sold.
An individual might consider a Chapter 13 bankruptcy following an event like a job loss or a divorce. Laws regarding bankruptcy are complex, and individuals who are considering filing may wish to consult an attorney. An attorney may be able to examine the situation and offer suggestions as to whether or not bankruptcy is the right choice. Once a bankruptcy is underway, accuracy may be important. Incorrect documentation or missed forms might mean delays in the bankruptcy process, and an attorney may be able to help prevent this.