I am in Foreclosure and Want to Keep My Home, are there Alternatives to a Chapter 13 Bankruptcy?

Yes, if you want to keep your home there are other options besides Chapter 13s.  I always view filing a Chapter 13 Bankruptcy as a last resort to saving a home. The reason is that in a Chapter 13, the bank may not modify your mortgage note; also with a Chapter 13, you need to be making enough money to not only stay current in your mortgage payments, but also to pay off all your mortgage arrearage over three to five years.

Before looking at a Chapter 13 bankruptcy, I first see if my Client can qualify for mediation. This is a court established program in Ohio where the homeowner requests the bank to modify his mortgage note. One can apply to the court to mediate only after the bank has filed a foreclosure complaint to take back his home. From my experience, it is easier to get the bank to modify your note—with more favorable terms- in court established mediation then to go directly with the bank outside of mediation.

Summary

The upside to a foreclosure action is that you may request the bank to modify your mortgage loan in mediation.

If the bank modifies your mortgage note, it will likely put all of your arrearage at the back end of the note. This is known as capitalizing your arrearage. The bank may also lower your interest rate.  The bank may also extend the terms of your note, extending it out over more years, thereby making your payments lower.

Summary

While a Chapter 13 is good for saving ones home, a court established mediation is generally better. If a homeowner wants to save his home, he may be able to modify in note in a mediation.

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Attorney Eli Tamkin is a Cleveland bankruptcy lawyer.  He has been practicing law since 1989 and in Cleveland Ohio since 1994. Since then, he has dealt with a variety of legal issues, including bankruptcy, real estate, divorce, personal injury, and probate. Many times, answering questions on bankruptcy draws on knowledge of other legal areas as well. His experience in these other areas, as well as in bankruptcy enables him to address your particular needs and to offer you advice that is applicable to your situation.

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