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Are you buried in debt? Are you constantly being harassed by creditors? Have you received a notice of foreclosure?

Filing for bankruptcy can help you put an end to all of these problems. At Jeff Field & Associates, our lawyers...


Bankruptcy Blog Post

What Happens to Your Mortgage Loan When You File Bankruptcy?

When you are in financial distress, staying on top of your mortgage can be difficult. Are you considering bankruptcy as an option? Before filing bankruptcy, you should take a moment to understand how it may affect your mortgage.

We explain to our clients seeking bankruptcy that they have two options: Chapter 13 or Chapter 7. However, each Chapter can affect your mortgage differently and in the following ways:

Chapter 13 Bankruptcy: Under Chapter 13 any past due payments are paid through a consolidation,along with the entire amount you owe on your other debts, typically for a period of three to five years. All future mortgage payments are paid directly to the lender as though a bankruptcy case had not been filed. In other words, filing Chapter 13 does not alter the terms of the mortgage loan such as the interest rate or payment amount.  The bankruptcy filing is beneficial by lowering the payment of other debt to make it easier to pay the mortgage loan.

Chapter 7 Bankruptcy: Under Chapter 7 for the individual looking to keep the property, any past due payments have to be paid or dealt with through loan modification or agreement with the lender.  Payments are paid directly to the lender.  If the property is to be surrendered to the lender then no payments are required.

Neither a filing of Chapter 13 nor Chapter 7  prevents the borrower from seeking a loan modification. Let us help you understand more about your mortgage loan and how bankruptcy may be of help.

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