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.