For many people considering Chapter 7 bankruptcy, the cost of their monthly mortgage payments is a driving factor in their unstable financial situation. These costs keep accruing each month, and missed payments can quickly add up.
If you are curious about preventing additional mortgage debt during Chapter 7 personal bankruptcy in Dallas, now is the time to contact our firm. Our dedicated Chapter 7 bankruptcy attorneys are here to answer your questions and help you pursue the fresh financial start you deserve.
Options for Avoiding Additional Debt
If you are already dealing with an overwhelming amount of debt, adding to that pile with missed mortgage payments is never ideal. Because your mortgage is attached to your home, you will still need to resolve these obligations during the course of your bankruptcy case. This is different from unsecured debts, such as credit card bills, which are typically discharged once your case is concluded.
There are different options for Dallas residents trying to prevent additional mortgage debt during Chapter 7 personal bankruptcy.
Short Sales
If your home is worth less than the remaining balance on your mortgage, the lender might agree to a short sale. A short sale refers to selling the property and applying the proceeds to the mortgage, even if it will not fully satisfy the debt. One of the positive aspects of a short sale is that it stops any additional payments from coming due.
Renegotiating the Loan
It may be possible to keep your home in Chapter 7 bankruptcy, especially if you renegotiate with the lender. While this means you will still be paying for your mortgage each month, you may be able to negotiate more favorable terms.
Surrender
Some people simply choose to surrender their home to the bank. While this does not automatically erase any old debts, it prevents additional mortgage payments from accruing each month.
Liquidation
Not all real estate sales are considered short sales. While you will need court approval, it may be possible to sell your property and make enough to pay off the mortgage entirely. The bankruptcy is likely to pursue this option if your home is not exempt from liquidation.
If you are worried about your mortgage bills piling up during bankruptcy, reach out to the attorneys at Allmand Law Firm.
Will Bankruptcy End My Mortgage?
While Chapter 7 can discharge your personal obligation to repay mortgage debt, it does not erase the mortgage lien itself. A lien is a legal claim your bank has on your property. It gives them the right to initiate foreclosure proceedings and eventually sell your home if you are unable to keep up with your monthly payments.
That means even if you are able to discharge your past mortgage debt, your lender still has the right to pursue foreclosure. In many cases, they will even file a motion with the bankruptcy court that allows them to do this while the bankruptcy case is ongoing.
If bankruptcy could eliminate liens, everyone would own their home free and clear after filing, which is not the case. Fortunately, you may have options for keeping your home or at least surrendering the property without facing any lingering debt afterward. Reach out to our Dallas attorneys if you have any further questions about preventing additional mortgage debt during Chapter 7 personal bankruptcy.
Talk to Us About Avoiding Additional Mortgage Debt During Dallas Chapter 7 Personal Bankruptcy
There are various options when it comes to preventing additional mortgage debt during Chapter 7 personal bankruptcy in Dallas. Our attorneys could help you explore these and advise you on the best path forward.
At Allmand Law Firm, we are prepared to work tirelessly to help you avoid accumulating debt. Contact our firm as soon as possible to schedule your case evaluation.
