Chapter 13 Bankruptcy Debtors: Government Considering New Mortgage Principal Paydown


The National Association of Consumer Bankruptcy Attorneys recently proposed legislation to assist chapter 13 bankruptcy debtors with their underwater mortgages. If implemented, this program will allow chapter 13 debtors to restructure their mortgage loan, get rid of the negative equity, and allow the debtor to pay down their mortgage faster during a bankruptcy. Here’s how it works.

  • Your mortgage interest rate will be reduced to 0% for five years. In other words, 100% of your monthly payment goes to pay down your principal.
  • During this five year period your monthly payment is recalculated at 31% of your gross monthly income. This is similar to a HAMP modification payment.
  • When the five (5) year period ends, the remaining balance owed will be amortized over 25 years at Freddie Mac rates. Also, second mortgages will be reduced or eliminated.

This program will afford the borrower payments that are more manageable. The chapter 13 bankruptcy will reduce or eliminate the unsecured debts, such as credit cards and improve the success rate of loan modifications.

If you have questions about how bankruptcy may help you, please call me at (480) 833-1113 for your free consultation.

Attorney Profile: Janet Spears, Arizona Bankruptcy Lawyer


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Rowley Chapman & Barney, Ltd. | Attorney Advertising

Written by:


Rowley Chapman & Barney, Ltd. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.