When you file for bankruptcy you are relieved of all your debts, however in many cases you are forced to part with your assets to pay back your debts as well as you can. However, one of the questions that many people have when filing for bankruptcy is what will happen to their mortgage. They may have fallen into a great deal of debt, but the idea of losing your home is to many people unbearable.
Different Types of Bankruptcy
There are two main types of bankruptcies that are used when filing for personal bankruptcy, and how your mortgage is affected by the bankruptcy changes with the type of bankruptcy that you are filing for. Consulting with a bankruptcy attorney can help you to learn which type of bankruptcy you should file for, and how the bankruptcy affects your mortgage can help determine which type of personal bankruptcy you want to end up filing for.
The Effects of Bankruptcy on Your Mortgage
If you are eligible to file for a chapter 13 bankruptcy, you will not have to worry about losing your house. The chapter 13 bankruptcy will allow you to negotiate with your creditors (including the bank that has given you the mortgage), and work out a way to keep paying off the mortgage in a way that you can afford to do. You will be able to continue living in your house without worrying about it being repossessed by the bank.
Chapter 7 bankruptcy is less straightforward. There are two possible options that may occur when you file for chapter 7 bankruptcy. You have the option to keep your house and mortgage, however you must be able to continue to make payments to the bank. You could also lose the house to the bank, but in this case you will not longer be held responsible for the mortgage.
The stress that comes with filing for bankruptcy can be great, however when it comes to losing your house, there is a great deal of concern for many people.