A Normal Chapter 13 Plan Is From 36 to 60 Months
Video Transcribed: I am Edward Kelley, a bankruptcy attorney in Oklahoma for Wirth Law Office. As I said in the last video, I’m talking about how chapter 13 can help you as you come out of COVID forbearance on your mortgage.
A lot of people are experiencing this, and this would apply to a vehicle too, but it’s a little more pressing with a home. So, to recap, a lot of people’s home mortgage has been in forbearance for, say, 12 months.
Say they have a $500 mortgage payment, for argument’s sake. The forbearance ends, and lo and behold, you owe the whole thing immediately. In this case, that would be $6000.
From what I’m hearing from people, a lot of times that wasn’t explained adequately by the mortgage company. If you’re not able to roll that into a new loan at the end of your mortgage, you may be looking at a difficult foreclosure if you don’t do a chapter 13 in Oklahoma.
How does chapter 13 allow you to fix this? Well, a 13 basically, from the date you file, it freezes in time… Let’s say you have that $500 a month mortgage, you’re now 6000 behind. A normal Chapter 13 plan is from 36 to 60 months. That’s from three years to five years.
The CARES Act, which is another COVID relief deal that is going on at least through 2022, allows you to extend that in some circumstances, usually when you already have a case on file, but does allow certain income to be excluded. We’ll go into that into another video. But at least five years to fix that arrearage.
So, let’s just say you do five years. That’s 60 months, and you have that 6000 behind. That’s an extra hundred a month. You’re going to have to be able to make your mortgage payment. You can’t do it if you can’t afford to keep the house, but that’ll give you 600 a month, and then in five years, boom, you’ll be fine. And the bank has no say about it. As long as you make those payments, at least from what I’ve described, they’re not going to have a basis to object to that plan.
Of course, you’re going to build in the interest, and your payments can change over time with escrow and taxes changing. But that basic arrearage won’t change, which will have the interest built-in, which I said for argument’s sake is 6000, and you can force them to let you save your house. They can’t argue about whether you can do it. I’m going to talk about some finer points of this in the next couple of videos.