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Chapter 13 bankruptcy may be answer to mortgage lender lawsuit

Purchasing a home is a significant financial decision for most people. This usually requires taking on some type of loan in order to obtain the funds necessary to purchase the home. However, this also means that the homeowner will be responsible for mortgage payments. One couple in Texas obtained a mortgage for their home but had trouble making payments. Such a situation could result in a possible Chapter 13 bankruptcy.

The mortgage lender filed a lawsuit against the couple in early March in an attempt to foreclose upon the home. The plaintiff alleges that the couple had failed to keep up with payments on the loan, which they had signed onto in early July 1988. The defendants allegedly owe $5,424.28 in unpaid debt on their mortgage.

It is possible that the couple will be able to ultimately come to a settlement agreement with the mortgage lender, which would help them to avoid a lengthy litigation process. It is not unheard of that a mortgage lender will settle for a lump sum that is significantly less than the total amount owed in order to settle the case quickly. However, if a settlement cannot be reached out of court, the couple will have to formulate a plan to protect themselves.

One option would be to fight the lawsuit in court, which could prove to be costly and could ultimately result in them losing the home in the end anyway. Another option they may want to consider would be to file a Chapter 13 bankruptcy, which would stop the lawsuit from moving forward. This could ultimately help the couple retain ownership of their Texas home.

Source: The Southeast Texas Record, Jefferson County couple sued by mortgage company for breach of contract, Ben Hart, March 16, 2014

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