Falling behind on your mortgage payments can be overwhelming, especially if you are living on a fixed income such as Social Security Disability. Many homeowners try to work with their lenders by offering partial payments, but banks often refuse unless the full arrears are paid. If foreclosure is already in motion, it’s important to know that you still have options.
How Chapter 13 Can Help
The main purpose of Chapter 13 bankruptcy is to give honest individuals, who fell into financial trouble through no fault of their own, a way to reorganize their debts and protect their homes.
In this situation, the debtor has a very limited budget surplus and cannot afford to repay the mortgage arrears in full over the standard 60-month Chapter 13 repayment plan. Instead, he is pursuing a loan modification within the Chapter 13 case. While approval is not guaranteed, this strategy immediately stops the foreclosure sale and provides an opportunity to make the mortgage affordable.
If the loan modification is approved, the debtor may be able to stay in his home and continue making manageable payments. If the modification is denied, he may still be able to pay the arrears through his plan over 60 months.
An Alternative to Loan Modifications
Not every loan modification request is successful. If the debtor cannot secure a modification or afford the arrears, there is another option: converting to Chapter 7 bankruptcy.
Under Chapter 7:
The debtor can discharge unsecured debts.
He may walk away from the home and start fresh financially.
Bankruptcy will delay the foreclosure process, giving more time to prepare for the transition.
While Chapter 7 does not save the home, it can relieve financial stress and provide a clean slate.
Which Option Is Better?
In many cases, curing the mortgage arrears through a Chapter 13 repayment plan is the best long-term solution because:
It allows you to keep your home.
You avoid adding extra debt to your mortgage.
You can stabilize your financial future without relying on uncertain modification programs.
However, if the mortgage payment is dramatically reduced through a loan modification, that may provide even greater relief. Every case depends on your financial circumstances.
Need Guidance With Mortgage Arrears?
If you are facing foreclosure or struggling with mortgage arrears, do not wait until it’s too late. Bankruptcy may give you the breathing room you need to protect your home or rebuild your financial life.
📞 Contact TAIEBLAW today at 856-235-4994 or visit TAIEBLAW.com to schedule a consultation.
Steven N. Taieb, Esq. has been a trusted South Jersey Bankruptcy Attorney for over 34 years. He is board-certified in consumer bankruptcy law by The American Board of Certification, accredited by the American Bar Association. With decades of experience, he has helped countless families explore Chapter 13, Chapter 7, and loan modification options to achieve financial stability.
