Rob Blake asked:
The filing of a bankruptcy may or may not affect a mortgage, depending on certain factors. It is possible that the mortgage will not be included in the bankruptcy, virtually leaving the mortgage unaffected. Another determining factor will be the type of bankruptcy that is filed.
Many people don’t realize that when filing for bankruptcy they can choose to file without including certain debts, such as a mortgage. As long as the mortgage is up to date and they can continue to make payments, it is possible that the bankruptcy plan can be filed without including their mortgage lender in the bankruptcy plan.
Chapter 7 vs Chapter 13: Know The Differences
Filing a Chapter 7 bankruptcy means that all debts are going to be discharged and will be wiped away according to the plan. There will be no further payments to these creditors, and the debtors will be giving up any security they had pledged as a result of the bankruptcy. In the case of a mortgage, this means that unless a plan is worked out with the mortgage lender, or the mortgage is not included in the plan, the debtors are relinquishing their right to the property and the lender will then take over the property.
This is why many debtors will not include the mortgage in the bankruptcy plan and continue to pay on the mortgage. When a mortgage is in arrears, it is not uncommon for a lender to modify the mortgage in a way that the past due payments can be added to the back of the loan so that after the bankruptcy has been discharged future payments will be made on time without the borrower having to make up for their past due arrearages.
When filing a Chapter 13 bankruptcy, a plan is put in place to continue to make payments to any secured creditors. While any unsecured creditors will have to be charged off, secured debts such as mortgages or car payments will become part of the plan. These secured creditors will continue to receive payments after the bankruptcy has been discharged, meaning the debtor will be able to retain the rights to their property as long as they abide by the payment agreement set forth in the bankruptcy petition.
This only affects the mortgage arrears, and not the mortgage itself. By filing a Chapter 13 bankruptcy any past due payments can be included in the plan, or may be modified by the lender to bring the account current so that the payments can continue to occur on a monthly basis in a normal fashion without having to pay extra to make up any past due amount after the bankruptcy has been discharged.
Many people file bankruptcy as a means to avoid foreclosure. What they need to remember is that foreclosure can be started again should their payments not be made according to the bankruptcy plan. That is the reason some people choose to file Chapter 7 bankruptcy and leave the property, as future payments will remain a burden, while others file Chapter 13 and stay in the home, feeling they can continue to make payments. This ability to continue paying after a bankruptcy has been discharged is the main factor in what will happen to a mortgage after bankruptcy has been filed.
Student Loan Refinancing
The filing of a bankruptcy may or may not affect a mortgage, depending on certain factors. It is possible that the mortgage will not be included in the bankruptcy, virtually leaving the mortgage unaffected. Another determining factor will be the type of bankruptcy that is filed.
Many people don’t realize that when filing for bankruptcy they can choose to file without including certain debts, such as a mortgage. As long as the mortgage is up to date and they can continue to make payments, it is possible that the bankruptcy plan can be filed without including their mortgage lender in the bankruptcy plan.
Chapter 7 vs Chapter 13: Know The Differences
Filing a Chapter 7 bankruptcy means that all debts are going to be discharged and will be wiped away according to the plan. There will be no further payments to these creditors, and the debtors will be giving up any security they had pledged as a result of the bankruptcy. In the case of a mortgage, this means that unless a plan is worked out with the mortgage lender, or the mortgage is not included in the plan, the debtors are relinquishing their right to the property and the lender will then take over the property.
This is why many debtors will not include the mortgage in the bankruptcy plan and continue to pay on the mortgage. When a mortgage is in arrears, it is not uncommon for a lender to modify the mortgage in a way that the past due payments can be added to the back of the loan so that after the bankruptcy has been discharged future payments will be made on time without the borrower having to make up for their past due arrearages.
When filing a Chapter 13 bankruptcy, a plan is put in place to continue to make payments to any secured creditors. While any unsecured creditors will have to be charged off, secured debts such as mortgages or car payments will become part of the plan. These secured creditors will continue to receive payments after the bankruptcy has been discharged, meaning the debtor will be able to retain the rights to their property as long as they abide by the payment agreement set forth in the bankruptcy petition.
This only affects the mortgage arrears, and not the mortgage itself. By filing a Chapter 13 bankruptcy any past due payments can be included in the plan, or may be modified by the lender to bring the account current so that the payments can continue to occur on a monthly basis in a normal fashion without having to pay extra to make up any past due amount after the bankruptcy has been discharged.
Many people file bankruptcy as a means to avoid foreclosure. What they need to remember is that foreclosure can be started again should their payments not be made according to the bankruptcy plan. That is the reason some people choose to file Chapter 7 bankruptcy and leave the property, as future payments will remain a burden, while others file Chapter 13 and stay in the home, feeling they can continue to make payments. This ability to continue paying after a bankruptcy has been discharged is the main factor in what will happen to a mortgage after bankruptcy has been filed.
Student Loan Refinancing
Tags: Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, Debts, Filing For Bankruptcy, Mortgage Arrears, Mortgage Bankruptcy, Mortgage Lender, Mortgages, Secured Creditors, Unsecured Creditors
Leave a reply to How Will Filing Bankruptcy Affect A Mortgage?