Many people don’t know this, but there may be situations when someone who has a reverse mortgage is facing possible foreclosure of their property. Although the information may be found in the reverse mortgage contract, the obligation to: remain current in any condominium or association dues, pay property taxes in time, and maintain proper insurance coverage is not actively displayed on television ads or marketing brochures. Failure to keep current with any of the above may result in the lender paying those amounts and then filing a foreclosure action.
A Chapter 13 bankruptcy can allow you to repay those amounts over a 36 or 60 month period. Here’s how it works: say you owe $8,000 in property taxes; your lender has initiated a foreclosure action and you don’t have the $8,000 plus costs and attorney’s fees, which now amounts to $10,000. In a Chapter 13, without any negotiation, you can split the $10,000 in 60 monthly payments (5 years) of $166.67. Assuming you can make those payments —plus a 10% fee for the bankruptcy Trustee (who will in turn disburse those payments to the lender) — and are otherwise eligible to file a Chapter 13 bankruptcy, you will be able to stop the foreclosure and get current.
It is important to consult with an experienced Chapter 13 attorney to discuss your options, requirements, and issues that may arise relating to your particular circumstances. The above information is intended solely for information purposes and it is not in any way a substitute for legal advice.
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