In Foreclosure in Jefferson, Oldham, Shelby, Spencer or Bullitt County, KY? Chapter 13 Bankruptcy May Actually INCREASE Your Mortgage Payment

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Many short sale clients tell me they filed Chapter 13 bankruptcy and it didn’t help because it caused their payments to go up.

When you file a Chapter 13 in Jefferson, Oldham, Shelby, Spencer or Bullitt County, KY, you have to continue to make your regular monthly payment, plus an extra monthly amount towards the back payments that you missed prior to the bankruptcy.

Important Disclaimer: I am a short sale Realtor in Louisville, KY, not an attorney. I am writing about my observations of the many clients I helped during and after their Chapter 13 or Chapter 7 bankruptcy. I am not an authority on bankruptcy laws and procedures and my opinions are not to be construed as legal advice. You must consult an attorney regarding any of the bankruptcy issues discussed here.

Wikipedia defines a Chapter 13 bankruptcy as “Under Chapter 13, the debtor proposes a plan to pay his creditors over a 3- to 5-year period. This written plan details all of the transactions (and their durations) that will occur, and repayment according to the plan must begin within thirty to forty-five days after the case has started.”

Don’t Forget That You Still Owe The Back Payments And Fees

If your mortgage payment is $1,500 a month and you are six months behind, your arrearage is $9,000. Add to that late fees and legal fees that your lender may have assessed and you can easily be over $10,000 in arrears.

Payments On Your Arrearage Can Make Your Combined Payment Go Up

In a Chapter 13, the court will decide how much of that $10,000 debt needs to be repaid, and how that extra payment will be spread out during the bankruptcy period.

The payment on the arrearage could be an extra $100 to $300 per month paid to the court, on top of the regular mortgage payment. This is a good arrangement for someone who suffered a temporary setback and can resume payments but can’t make up the big lump sum arrearage.

Defaulting Can Cause The House To Right Back Into Foreclosure

If the borrower defaults on the payment, the lender can petition the court to pull the house out of the bankruptcy and foreclose.

Tired of the Struggle

Many borrowers are tired of the stressful struggle or simply don’t have the funds to pay the increased payments each month. They see their house getting foreclosed upon anyway after throwing thousands of dollars of scarce survival money at the payments.

A Short Sale Can Often Help The Borrower Avoid Foreclosure and Bankruptcy

In many cases the short sale could have gotten the house sold, the deficiency forgiven by the lender and the bankruptcy avoided altogether.


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Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



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Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

These are the times that try mens souls.  They are not good choices.

Oct 22, 2010 06:21 PM #1
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