Illinois is the third-worst state in the U.S. for foreclosures and mortgage delinquencies, according to a recent report from the Federal Housing Finance Agency. In 2011, more Illinois homeowners were facing foreclosure or seriously delinquent on their mortgages than homeowners in any other state except Florida and California.
As reported by the Chicago Tribune, more than 74,000 homeowners were either in foreclosure or at least 90 days past due on their mortgage payments. This figure represents more than 5 percent of all residential mortgages backed by Fannie Mae or Freddie Mac in Illinois. Of those, 42,000 were at least a year past due.
Short sales and deeds, which are used by some delinquent homeowners as an alternative to foreclosure, have also been on the rise in recent months, with an increase of 13 percent nationwide in the last quarter of 2011.
Avoiding Foreclosure With Chapter 13 Bankruptcy
For some homeowners who are unable to make their mortgage payments, Chapter 13 bankruptcy may be an option to help them avoid foreclosure and keep their homes. Unlike Chapter 7 bankruptcy, which may require filers to surrender their homes and other assets in exchange for debt forgiveness, Chapter 13 bankruptcy allows filers to keep their property while making payments on their debts according to a structured payment plan. This is sometimes referred to as reorganization bankruptcy, as opposed to liquidation bankruptcy under Chapter 7.
In Chapter 13 bankruptcy, people pay off some or all of their unsecured debts over a period of three to five years. The Bankruptcy Court creates a payment plan based on the individual’s income after taxes, living expenses and other deductions. To qualify for Chapter 13 bankruptcy, filers must be able to show that they have enough income to make payments according to the payment plan.
In addition to the income requirement, there are limits on the amount of debt that a person may have to qualify for Chapter 13 bankruptcy. To qualify for Chapter 13 bankruptcy, a person must have less than $360,475 in unsecured debt like credit card debt and medical bills, and less than $1,081,400 in secured debt like a home mortgage or car loans.
For more information about Chapter 13 bankruptcy and to learn whether it may be right for you, contact an experienced bankruptcy attorney.