It’s true. Under the new bankruptcy laws of Indiana, first mortgage debt cannot be directly discharged through bankruptcy without forfeiting the home. Having said that, though, I must add that Chapter 13 bankruptcy law in Indiana does help stop foreclosure. Can both those seemingly contradictory statements be true? Yes, and every one of the good bankruptcy attorneys in Indiana who works in the Zuckerberg bankruptcy law offices has used Chapter 13 as a tool to save homes.
I must remind Bankruptcy in Indiana readers that filing Indiana bankruptcy (even under Chapter 13 bankruptcy law in Indiana), does not mean you get to keep your home for free. Your mortgage lender (or a servicing company they’ve hired), still needs to be paid. Even though other, non-secured loans may have been discharged through bankruptcy, even if I’ve been able to provide payday loan debt help, even if medical debt has been put on a “do-able” payment plan, if there is a lien against your home (a first mortgage), the creditor holding the lien still needs to be paid.
The way Chapter 13 bankruptcy helps stop foreclosure, in very simple terms, is that it frees up money. Since other debts have been forgiven through filing personal bankruptcy in Indiana, that gives you money to get the mortgage arrears caught up and then keep up with regular mortgage payments over a five year period.
As part of providing Indiana bankruptcy information, I often speak of “buying time” and “freeing up money”. Filing individual bankruptcy in Indiana (and sometimes small business bankruptcy in Indiana) can often accomplish both.
Buying time: The bankruptcy automatic stay halts most legal actions and collection efforts, which then allows debtors to make a plan for rebuilding their financial situation. Specifically, the moment the lender receives notice that a homeowner has filed personal bankruptcy in Indiana, that lender cannot continue foreclosure efforts and can’t file lawsuits.
Freeing up money: True, that halt in foreclosure efforts doesn’t make the first mortgage debt go away. But, under Indiana bankruptcy law, other debts can be forgiven or reduced, thus freeing up money for the mortgage payments.
As one of my colleagues the Columbus bankruptcy lawyer likes to say, “When I'm talking to client, there is no "one size fits all" solution”. Designing just the right plan is what being an experienced bankruptcy attorney in Indiana is about for me.
Let's be honest. "Foreclosure" and "bankruptcy" are both words you probably never expected to be concerned about. They were just two more words in the dictionary. But then…life happens. Talking with an attorney experienced in Indiana bankruptcy and foreclosure law can help you find your way.
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg