I received a call today from a banker. His office is overwhelmed with phone calls from people who have been laid off in the past week, and who are facing the difficult situation of possibly not being able to make their next mortgage payment. While many banks and lenders are offering financial assistance to get through these trying times the US is facing with the Covid19 shut downs, sometimes that may not be enough.
What options do you have once the dust settles, you are back to work, but you have fallen behind on your car and/or mortgage payments? One option may be a Chapter 13 bankruptcy. Chapter 13 allows a reorganization of your debts by requiring your bank to give you up to 5 years to catch up any amount you have fallen behind on your loans. Let’s look at an example:
Harry Homeowner is laid off from work for 4 months. With little to no income, he isn’t able to make his $700/mo house payment. When Harry gets back to work, a Chapter 13 bankruptcy allows him to take the amount he is behind (4 X $700 = $2,800) and repay that over 3 to 5 years. So after filing for relief under Chapter 13, he would begin making his regular monthly payment of $700 again, and an additional $50 a month to catch up the amount he was behind.
Hopefully, banks will have flexibility and willingness to work with those negatively affected financially by this current crisis. But keep in mind that if they don’t, or you find that you don’t qualify for their programs, you will have another alternative to deal with these loans. We will be here to walk you or your loved ones through this process discretely and efficiently so you can focus on getting life back to normal.
We are currently scheduling phone and video meetings with clients. Call us today at 419-289-8080 or 419-994-4892 to schedule a time to have your legal questions answered by one of our knowledgeable attorneys from the comfort of your home.