Chapter 13 Bankruptcy Can Save Your New Mexico Home From Foreclosure

December 22, 2011

Chapter 13 Bankruptcy Can Save Your New Mexico Home From Foreclosure

In today's dire financial times, many people in New Mexico and throughout the rest of the country are facing foreclosure. Some people are under siege from creditors and unable to pay off their debts. Others have high medical bills and are unable to catch up on delinquent payments. With a high national unemployment rate, many have suffered through an extended period of unemployment, and thus fell behind on bills, even if now employed again. In such cases, those who file Chapter 13 bankruptcy may be able to pay off debt and save an otherwise soon-to-be foreclosed home.

There are several types of bankruptcies, but most individuals file either Chapter 7 or Chapter 13 bankruptcy. Through Chapter 7 bankruptcy an individual's existing assets are used to pay off debts. Federal and New Mexico laws exempt some property from creditors, however, so consult with an experienced bankruptcy attorney in your state to see which assets are protected in bankruptcy.

After creditors are paid according to the bankruptcy plan, the remaining debts are discharged, with only a few exceptions. However, while filing Chapter 7 temporarily halts foreclosure proceedings (along with all other collection efforts), the home is eventually lost to creditors and the mortgage lender in Chapter 7 bankruptcy.

Also, under the "means test," if you earn more than the state median income, then typically you are not eligible for Chapter 7 protection.

Chapter 13 Bankruptcy May Be Best for Homeowners

Under Chapter 13, you pay a portion or all of your debt under a repayment plan that lasts three to five years. Once Chapter 13 is filed, all foreclosure proceedings are halted and delinquent mortgage payments become part of the repayment plan and may be paid over time. Chapter 13 allows debtors to rearrange all other debts and to pay them over the lifetime of the repayment plan. Chapter 13 may wipe out home equity loans or lines of credit based on the home, especially if the value of the home has decreased.

To be eligible for Chapter 13, the filer need only have less than $360,475 in unsecured debt (like credit cards and medical bills) and secured debts less than $1,081,400 (such as a home or car).

Deciding whether to file bankruptcy is an important decision. If you are facing foreclosure contact a local experienced bankruptcy attorney to discuss your situation and whether Chapter 13 bankruptcy is right for you.

Article provided by Larry Leshin Law Office
Visit us at http://www.larryleshinlaw.net