If you’re facing foreclosure and wondering, “Will I be able to keep my home if I file bankruptcy?”, there may be options for you. Filing for a Chapter 7 Bankruptcy can possibly delay your foreclosure for a few months. A Chapter 13 Bankruptcy filing may even help you save your home altogether.
In bankruptcy, a contract signed between the lender and the debtor.
- Reaffirms the personal liability for the debt.
- Must be entered into before the Discharge in Bankruptcy is filed.
- Must be approved by the court.
Pros of Reaffirmation Agreement
- Usually to lenders advantage because it keeps you binded to the debt.
- You have 60 days after signing the document to revoke.
- Permanent change in your mortgage loan terms.
- Allows the loan to be reinstated under the new terms.
- New terms include a new mortgage you can now afford.
FDIC Sponsored Loan Modification Program
The Homeowner Affordability and Stability Plan
- Helps borrowers who cannot make their payments due to insufficient income.
- Provides options for borrowers who are up-to-date on their payments, but can’t refinance because of a major decrease in the value of their home.
- No fees for borrowers through this program.
Can I Keep My Home in Bankruptcy?
When you’re asking yourself, “Can I keep my home in bankruptcy?”, keep a few things in mind.
Order of Relief
When you file for bankruptcy, an Order for Relief is automatically issued by the bankruptcy court.
- Includes an “automatic stay” ordering all creditors to immediately stop all collection actions and activities.
- Any scheduled foreclosure sales are legally postponed during the pending phase of the bankruptcy.
Chapter 13 Bankruptcy Mortgage
1st Mortgages & Chapter 13 Bankruptcy
- Arrearage is paid off over the length of the new repayment plan.
- As long as the repayment plan is followed, foreclosure will cease.
2nd and 3rd Mortgages & Chapter 13 Bankruptcy
- Court can “strip off” 2nd and 3rd mortgages.
- 2nd and 3rd mortgages can be re-categorized as unsecured debt, making them last priority.
Chapter 7 Bankruptcy Mortgage
- Time to Save – During the pending phase, you can live in your home free for up to several months. This gives you time to save money to relocate, or possibly save your home.
- Get Debt Canceled – Chapter 7 Bankruptcy cancels all debt secured by you home. This includes your 1st mortgage, 2nd mortgages and home equity loans.
* These are just tips to help you understand whether bankruptcy can help you. For legal advise, please contact a bankruptcy attorney.