Mortgages After Bankruptcy

Bankruptcy does have an impact on mortgage. Hence, whether you are in the process to file Chapter 7 or Chapter 13 bankruptcy, it becomes imperative to understand its influence on the mortgage.

The impact of Chapter 7 bankruptcy on the mortgage

• When you file the Chapter 7 bankruptcy, your property is conceived either in exempt or non exempt category.
• The dependency of the same is dependent on the bankruptcy trustee.
• Now, when you get a mortgage, the mortgage company gives you a loan.
• With this money you are able to purchase some property.
• However, when you file Chapter 7, you are not ‘legally obligated’ to repay the loan.
• But, the lender has the right on the property.
• Hence, if the lender enforces lien on you, you will lose the property.
• Paying the mortgage is the only option left if you want to keep your property.

The impact of Chapter 13 bankruptcy on the mortgage

• With Chapter 13 bankruptcy, you will not lose your property.
• You are required to submit a plan with respect to the repayment mode you will be pursuing.
• There are cases; where in an automatic stay is issued.
• This implies that the creditors cease to take collections from you.
• This particular step of the procedure is involved so that there is a layoff foreclosure.
• In fact, there is another aspect related, it at the same time ceases the repossessions of homes and property.