There are times in which a debtor may fall behind on mortgage payments due to different situations such as job loss, income reduction or medical illness. While it is understandable these things happen you’ll want to keep in mind actions to avoid so you can maintain your home. You’ll also want to note what you should do when and if you get behind on payments. Actions depend on which chapter you file.
Falling Behind on Mortgage During Chapter 7 Bankruptcy
If you fall behind on your payments, what may happen next depends on what stage your bankruptcy case is in. During Chapter 7 bankruptcy the mortgage company could look to enforce legal action if a final decree has yet to be received. In some cases the mortgage company may look to have the automatic stay lifted to proceed with foreclosure. The good news is there are a few things you can do to prevent legal action from the mortgage company. Make sure payments are received by your mortgage company on time. Sometimes mortgage companies cease automatic payments from your account or stop mailing statements to you during bankruptcy.
Falling Behind on Mortgage During Chapter 13 Bankruptcy
During Chapter 13 bankruptcy it depends on whether or not you’ve fallen behind before or after your filing. If you are not behind at the time of your filing your mortgage payments may still be made to your lender, but they may not be included in your repayment plan. If you are behind when you file payments are forwarded to your trustee since it would be part of your repayment plan. If you were making payments before your filing and later fall behind during Chapter 13, the payment would be added to your repayment plan. Just like with Chapter 7 bankruptcy, you’ll want to be sure the mortgage company is receiving payment on time.
If you are falling behind on your mortgage during bankruptcy don’t hesitate to contact us for a free consultation. We would be more than happy to answer any questions you may have.