If you are finding it hard to keep up you mortgages and other debt payments, you can file for bankruptcy and save your home from getting foreclosed. There are basically two types of bankruptcies that you can file for – chapter 7 and chapter 13 bankruptcies. Under chapter 7 bankruptcy most of your assets are sold off by the bankruptcy trustee to pay off the dues of your creditors and lenders. However, under chapter 13, you will be provided with a repayment plan so that you can make payments according to it.
How can you keep your home?
If you file for a chapter 7 bankruptcy, and if you want to retain your home, you will have to file the bankruptcy excluding the mortgages. That is, if you want to retain your home, you will have to go on making the payments on your mortgages.
In a chapter 13 bankruptcy, you are required to go on making the payments through the repayment plan as offered by the court. The best part about this repayment plan is that, the interest rates can’t increase and moreover the repayment plan is done based on your affordability. However, in case of mortgages and other secured debts, the lenders can again sell off your home and your other assets and take away the proceeds. So, here too, you will have to talk to your mortgage lender about the payments and continue making the payments on your mortgages if you want to retain your home.
Another thing that is essential for you to remember is that you will have to reaffirm your mortgage if you want to go on making the payments on your mortgages while in bankruptcy. Otherwise, the monthly payments do not get listed on your credit report. If you reaffirm your mortgage, it will help you boost your credit. Reaffirmation is an agreement between you and your lender through which you reaffirm the debt that had existed before you filed for the bankruptcy. So, as said if you don’t reaffirm the debt, it either gets eliminated or discharged through the bankruptcy.
So, the best thing for you to do in bankruptcy is going on making the payments on your mortgages after filing bankruptcy. First, remember to reaffirm the mortgage or mortgages that you have and then try to go on making on time payments on those mortgages. It becomes easier to go on making payments on your mortgages through bankruptcy as some of the other debts get discharged and you are required to make only small payment under chapter 13 bankruptcy.