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Saving home from foreclosure in chapter 13 bankruptcy

This blog has reported several stories that indicate that filing for bankruptcy protection can in many cases save a family home from foreclosure. The tough economy has left many working homeowners in Cincinnati in financial distress. Bankruptcy can provide an option for people who have struggled under debt to get back on top of their bills.

One East Coast city councilman who got behind the eight ball on debts used the federal bankruptcy laws to not only stop the foreclosure process, but to retain his home after becoming delinquent on the mortgage payments. The man is married, and both spouses work. But their debt load got out of hand and bankruptcy protection may allow the couple to get back on their feet.

According to court records, the city councilman and his wife make close to $105,000 each year in combined income. Generally, married couples are allowed to file a joint petition under the bankruptcy laws. The couple reportedly takes home roughly $6,000 per month, but that is not enough to cover their overall debt load.

The couple reportedly owes $242,731 in total debt, including over $6,000 to a jewelry store, $3,500 to a local utility, and hefty car and cellphone payments each month.

When the couple learned the bank intended to foreclose, they sought out protection through a chapter 13 bankruptcy petition. In many cases, working people can retain their property through chapter 13 bankruptcy protection. Past due mortgage payments can often be worked in to the 3 to 5-year chapter 13 bankruptcy plan.

The city councilman and his wife are paying their monthly mortgage again and are required to make monthly payments of $350 to the bankruptcy proceeding under their chapter 13 plan. Each individual chapter 13 payment plan is unique. An experienced chapter 13 bankruptcy attorney can explain how the complex bankruptcy code works and how a payment plan is determined.

"I have problems just like everybody else...I'm doing what I have to do to save my house and family," the councilman says about the decision to file for bankruptcy.

Source: The Providence Journal, "City councilman seeks bankruptcy," Alisha A. Pina, Sept. 8, 2011

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