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A Bankruptcy Allows an Individual to Settle the Arrears by Spreading them out over a 5 Year Period

June 9, 2017

The requirement of Chapter 13 is that you resume your pre-default regular monthly mortgage payments beginning in the month after we file for you. However, your only alternative under the state law is to clear the arrears on a lump sum, which many people cannot do. So, the bankruptcy allows you to take those arrears and spread them out over a 5-year period while resuming your monthly mortgage payment. The reason that’s important is because once the lender issues a Notice of Default, under California state law, they are not allowed to accept a payment from you. So, you couldn’t pay the mortgage if you wanted to. If you want to just try to start paying your mortgage again, they can’t accept those payments because if they do, it resets the foreclosure timeline and they don’t want to do that.