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Terry L.
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Category: Bankruptcy Law
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Experience:  Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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I have a situation where I have a balloon mortgage. I pay interest

Resolved Question:

I have a situation where I have a balloon mortgage. I pay interest only payments which are $1281/month. In 2018 my payments are going to skyrocket to around 1900/month which is entirely too much. I would be forced out of my house guaranteed.

I cannot refinance my property because at present my credit rating has a foreclosure on it from a property that we were renting out and could not keep.

Also, any refinancing would mean that the monthly mortgage would rise to around 1500/month which is still way above what I can afford.

Would it be possible to put my mortgate under chapter 13, and make my payments smaller and yet make it so I can pay principle?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 4 years ago.
Hi and thank you for your question. Chapter 13 will not modify the terms of your loan. The chapter 13 is capped at 5 years as well. It is usually designed to cure mortgage default over that time frame, and not as a vehicle to pay the regular installment. The full contractual installment payment will need to be paid each month, either directly by you, or as part of the chapter 13 payment plan, including any balloons that come due during that case.

Therefore, unless you have other debt, chapter 13 isn't the best option in my opinion. You should keep looking to refinance that loan, perhaps the current lender will be able to, or just wait until the year before the balloon to try, since you will have more distance from the foreclosure at that time. Thanks for your question, and good luck.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2496
Experience: Better Business Bur 15yrs bankruptcy experience. Chicago Bar
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