Ohio Bankruptcy Law: How to Handle Mortgage Payments
Ohio bankruptcy law provides individuals facing financial difficulties with legal avenues to manage or eliminate debt, including mortgage payments. This guide explores how to navigate the bankruptcy process in Ohio, specifically focusing on handling mortgage payments.
When considering bankruptcy in Ohio, there are two primary types of bankruptcy for individuals: Chapter 7 and Chapter 13. Each type affects mortgage payments differently.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, enables individuals to discharge most unsecured debts, such as credit card debt and medical bills. However, it doesn't typically discharge mortgage debts. In Ohio, if you owe a significant amount on your mortgage and want to keep your home, it's crucial to continue making mortgage payments.
If you stop making payments, your lender has the right to initiate foreclosure proceedings. By filing for Chapter 7, you may gain a temporary reprieve from foreclosure, providing an automatic stay that halts collection efforts temporarily. This gives you a chance to reassess your financial situation. Nevertheless, to keep your home, it's essential to resume payments as soon as possible.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is often more advantageous for homeowners looking to manage their mortgage payments. This type allows individuals to create a repayment plan to pay off outstanding debts over three to five years. If you’re behind on mortgage payments, Chapter 13 can help you catch up.
When filing for Chapter 13, your delinquent mortgage payments can be included in your repayment plan. You’ll make monthly payments to a trustee who will then distribute those funds to creditors, including the mortgage lender. This approach can help prevent foreclosure and retain your home as long as you adhere to the repayment plan.
Types of Mortgage Relief in Bankruptcy
Whether you're filing for Chapter 7 or Chapter 13, there are several strategies for handling mortgage payments under Ohio bankruptcy law:
- Reinstate the Loan: Under Chapter 13, you can reinstate a mortgage loan by making regular monthly payments and catching up on arrears over time.
- Modify the Loan: It might be possible to negotiate a loan modification with your lender as part of your repayment plan, potentially reducing monthly payments.
- Surrender the Property: In Chapter 7, if you cannot afford the mortgage payments, you can choose to surrender the property, allowing the lender to take possession and discharge liability for the debt.
The Importance of Legal Guidance
Handling mortgage payments during bankruptcy can be complex. It’s essential to seek legal counsel from a qualified bankruptcy attorney familiar with Ohio laws. An attorney can provide tailored advice based on your financial situation, ensuring the best possible outcome in protecting your home and managing your debts.
Ohio bankruptcy law allows homeowners to address their mortgage payments effectively. By understanding the options available through Chapter 7 and Chapter 13 bankruptcies, you can navigate your financial challenges and work toward a more stable future.