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Second mortgages are unsecured debts in Chapter 13 bankruptcy

Arkansas homeowners who are facing financial hardship may be exploring their options under the U.S. Bankruptcy Code. Although Chapter 7 bankruptcy is an option, Chapter 13 is more suitable when mortgages are involved. This option allows homeowners to reorganize their debt repayments by drafting a plan to schedule payments over a period of three to five years following the approval of the court. The home will be included in the plan, and as long as payments under the court-approved plan are kept current, the homeowner will not lose his or her home.

Chapter 13 one option for debt reorganization

Many Arkansas residents are familiar with the rap star known as 50 Cent. The musician made recent headlines after he was sued for releasing a video online, showing a woman engaged in sexual acts. She sued, and the outcome of that civil suit was in her favor. However, before the jury could determine the level of monetary compensation that she is due, 50 Cent filed for Chapter 11 personal bankruptcy. Chapter 11, much like Chapter 13, is often sought as a means of financial reorganization.

Supreme Court rules on Chapter 13 bankruptcy plan appeals

Arkansas residents who are struggling with overwhelming financial obligations may be interested in a recent Supreme Court decision that may limit their rights in Chapter 13 bankruptcy. The Court has rejected an argument that the refusal of every proposed bankruptcy payment plan allows for an appeal.

Options for a mortgage in Chapter 13 bankruptcy

Individuals living in Arkansas may be curious about what a homeowner can do about their mortgage if they have filed for bankruptcy. If they cannot afford the payments, they do have the option to walk away from the home during bankruptcy proceedings under some circumstances.

Discharging debt under Chapter 13

An Arkansas resident who files for bankruptcy protection may be able to have many debts discharged. However, in a Chapter 13 bankruptcy, there are requirements that must be met before this is done. For instance, an individual must prior to filing pass a financial management course that is approved by the court having jurisdiction over the matter. Furthermore, a debtor must make payments to creditors under a court-approved plan that will last for a period from three to five years.

What happens to a home during bankruptcy

When an Arkansas resident files for Chapter 13 bankruptcy, they may be able to keep their home. During the repayment period, the mortgage company generally has no choice other than to wait until the homeowner completes said plan. Typically, a repayment plan takes three to five years to complete. However, a lender may be able to proceed with foreclosure proceedings if the debtor misses even a single payment during this time.

What are the eligibility requirements under Chapter 13?

Chapter 13 involves a restructuring of an eligible individual's debts, with the goal of bringing the payments down to a manageable amount that the debtor can afford to pay. The Chapter 13 plan allows debtors to repay most or even all of their existing debts over a period of three to five years. This type of adjustment may be preferable to a full liquidation because it allows people to save some of their property, including homes and cars. Co-signers are protected because the secured assets are maintained and paid for rather than being surrendered to the lien holders.

Is Arkansas at risk of an attack of 'Zombie Foreclosures'?

The real estate market analysis firm RealtyTrac is out with some of its latest numbers. It reports that the tally of properties across the country that were under foreclosure fell in February for the 41st month in a row. The company says the figures for last month were the lowest recorded since December 2006.

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