How Will a Bankruptcy Filing Impact My Mortgage?
Are you considering a consumer bankruptcy filing as an individual or with your spouse, but wondering how the filing will impact your current mortgage? The answer to that question will depend on a number of factors, including the type of bankruptcy you are filing for and how much equity is currently in your home. Our South Florida bankruptcy lawyers can provide you with more general information below, and we can speak with you today about your bankruptcy plans and your particular financial circumstances that include your home loan.
Chapter 7 Bankruptcy and Your Current Mortgage
If you are planning to file for a Chapter 7 bankruptcy, the next issue to consider is how much equity you have in your home. Under Florida’s exemptions, you will have access to an extremely generous homestead exemption — you can exempt all of the equity in your home as long as it is your primary residence and as long as you meet the requirements for using Florida’s homestead exemption.
For mortgages that are nearly paid off, and where the debtor has significant equity in the home, you may be able to keep your home in your Chapter 7 bankruptcy filing. In liquidation bankruptcies where there is limited or no equity in the home, you will likely need to plan to have your mortgage debt discharged and to leave your current home.
Chapter 13 or Chapter 11 Bankruptcy and Your Current Mortgage
In reorganization bankruptcies under Chapter 13 or Chapter 11, bankruptcy will actually help your current mortgage situation, and you will be able to remain in your home. Reorganization bankruptcies allow you to catch up on any back-owed payments with your lender, and you can even stop a foreclosure and catch up on mortgage payments. In short, through a reorganization bankruptcy, you can become current on your mortgage.
Obtaining a New Mortgage After Bankruptcy
What about obtaining a new mortgage after bankruptcy? According to LendingTree, you can obtain a new mortgage within a relatively short time after filing for bankruptcy, but the specific waiting time will depend on the type of bankruptcy and the type of mortgage.
You can obtain an FHA loan within one year after filing for Chapter 13 bankruptcy, or within 2 years after filing for Chapter 7 bankruptcy. For a conventional loan, you can obtain a loan within 2 years after filing for Chapter 13 bankruptcy and within 4 years after Chapter 7 bankruptcy.
Contact Our West Palm Beach Bankruptcy Lawyers to Learn More About Filing for Bankruptcy When You Have a Mortgage
If you currently have a mortgage and are considering bankruptcy, it is completely normal to have questions about how a personal bankruptcy filing can affect your mortgage. As we discussed above, most homeowners who want to remain in their homes during and after a bankruptcy case will likely want to file for a reorganization bankruptcy under Chapter 13, unless you have already paid off your home loan or are close to doing so. To have your questions answered or to begin working on your bankruptcy filing, you should reach out to one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan Delaney & Eller, PLLC. We can speak with you today to learn more about your financial circumstances and to advise you on your bankruptcy options going forward. Contact our firm for assistance.
Sources:
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222.html
lendingtree.com/home/mortgage/qualifying-for-a-mortgage-after-bankruptcy/
