Are you contemplating on filing bankruptcy? Well, you need to decide whether you are going to keep your home or not. In case you are eligible for a chapter 7 bankruptcy and determined to keep your home then you should be aware of certain things.
At the time of filing bankruptcy should you not be behind your mortgage payments and homeowners’ association dues at any cost. The federal bankruptcy law requires you to be up to date with your mortgage payments and dues of homeowners’ association during the whole bankruptcy process. Consequences can be fatal if you fail to meet the obligations. The mortgage company will take legal action against you and the “relief from stay” will most probably be lifted. In that case you would possibly face foreclosure. The mortgage institution or the homeowners association can take away your home from you. In chapter 7 bankruptcy the lenders will surely appeal for foreclosure while in chapter 13 bankruptcy, things depend on when the bankruptcy was filed.
If you have filed chapter 13 bankruptcy then you require making payments to the Trustee’s office every month. The trustee will then pay your creditors accordingly with this money. The Bankruptcy court decides which debts needs attention immediately. Priorities are set and payments are made accordingly. Mortgage lenders are usually top priority cases. Therefore, mortgage payments are usually included in chapter 13 payment plan. You won’t be allowed to pay your mortgage bill directly. You have to send the money to the trustee who would make the payment. There is an exception to this rule in some states. If you are paying your bills regularly and have not fallen behind your payments then the trustee might allow you to make your homeowner’s association dues directly. Some states will even allow you to make your mortgage payments directly if your mortgage bills are up to date.
Whether you file chapter 13 bankruptcy or chapter 7 bankruptcy, you should continue paying for your mortgage. Also, you should not fall behind your mortgage payments.