When people are filing for Chapter 7 Bankruptcy in Littleton, they are often worried about keeping their home – especially if they still have a mortgage. We are often asked: “What happens to my mortgage when I declare bankruptcy?” The answer to this question is much more in-depth than we can completely answer in this post. If you are considering Chapter 7 bankruptcy, it’s important that you work with an experienced bankruptcy attorney who can walk you through the process. A lawyer will be able to discuss the effect that filing for bankruptcy will have on your mortgage, in your unique situation. Let’s discuss a few general ways that filing for Chapter 7 bankruptcy in Centennial, Aurora and Littleton has on your mortgage:
Chapter 7 Bankruptcy in Littleton and Mortgages: General Impact
Discharge of your Mortgage:
When you file for Chapter 7 bankruptcy in Littleton, your mortgage debt will be discharged along with your other debts. This means you’ll no longer be personally responsible for paying your mortgage. But, if you want to rebuild your credit after you have filed for bankruptcy, you’ll have to reaffirm your mortgage so your payments will appear on your credit history. To keep your home, you must catch up with your payments as directed by the bankruptcy court.
Halt your Foreclosure:
If you are in the middle of foreclosure on your house, filing for Chapter 7 bankruptcy will halt the foreclosure. This is done with a process called Automatic Stay. Automatic Stay keeps your creditors at bay so you can catch up on your payments – including your mortgage. The length of time that you have to repay past due amounts varies anywhere from 3 to 5 years. This depends on whether you file for Chapter 7 or Chapter 13 Bankruptcy.
There is a small portion of equity in your home that is exempt from bankruptcy. This means that you can often keep your house if the amount of equity you have in your home is under the exemption amounts, provided you are current on payments or catching up a time authorize by the bankruptcy court.. The exemption amount changes with the law. It is generally $60,000 for an occupied home, and $90,000 for owners over 60 years of age, or who are disabled, or who have a dependent who is disabled. Therefore, it’s important you contact an experienced Littleton bankruptcy lawyer. You need a lawyer to work with you to determine whether you can retain possession and equity in your residence.
Mortgages and Refinancing in the Future:
It can be difficult to get a mortgage or refinance your home in the future if you’ve filed bankruptcy. Be sure to consult one of our bankruptcy attorneys to help you with the best timeline for filing bankruptcy. You will want to refinance before you file for bankruptcy.
We hope we answered your question: “What happens to my mortgage when I declare bankruptcy?” If you are considering filing for Chapter 13 or Chapter 7 bankruptcy in Littleton, it’s important to work with an experienced bankruptcy attorney who can help you keep your house and find exemptions. Call now to request your free initial consultation with Barry Arrington, a trustworthy and understanding bankruptcy lawyer at 303-205-7870 or submit the “Get Help Now” form to begin your journey towards financial freedom.