If you are thinking about bankruptcy, you should consider the following things. Bankruptcy is not a sign of defeat. It is a practical step to take before it’s too late.
Declaring for bankruptcy will affect your life and your living situation in different ways. You may have to sell off some of your assets, give up some rights, and even move house depending on the circumstances.
When looking at whether or not you should declare for bankruptcy, it’s important to be aware of what this process will entail and also how it will affect your housing options, especially your mortgage or ability to get one.
If one of the main reasons you are filing for bankruptcy is because your mortgage payments are too expensive, explore some Mortgage refinancing options beforehand, as it may save you from having to file.
If you have no other choice, we are going to take you through how filing for the different types of bankruptcy will affect your mortgage.
Chapter 7 Bankruptcy, You Will Lose Your Home
Chapter 7 Bankruptcy is a form of bankruptcy that allows a person to erase certain debts and discharge other debts. However, a person filing for Chapter 7 bankruptcy will be required to surrender their home as part of the process.
If you can turn your situation around, there are ways to keep your home from being taken from you. In order to do so, you might need an experienced bankruptcy attorney or a credit counselor.
Chapter 13 Bankruptcy, You Can Keep Your Home
If you file for Chapter 13 Bankruptcy, you can likely keep your home. But there are some exceptions.
For example, if you have cosigned for a loan to buy your home, the lender may be able to take it back if you don’t pay the loan in full.
If you owe money on a secured debt like a mortgage or car loan, your creditor may be able to take back your collateral and sell it at auction if you file for bankruptcy. This means that they can lose their security interest.
It Will Be Hard to Get Approved Post Bankruptcy
It is hard to get approved for a mortgage post bankruptcy. This includes people who are in the process of filing for bankruptcy or who have already filed for it. It doesn’t matter what type of bankruptcy it is.
When a person files for bankruptcy, they are faced with a series of difficult decisions. They might have to liquidate their assets and settle their debts in order to get on the road to rebuilding their life, but it can be difficult to get approved for a mortgage when you’re in this position.
After filing for bankruptcy, people will need to determine what kind of mortgage they should apply for and whether or not they can afford one. It is important that borrowers start this process as soon as possible because the approval process can take anywhere from six months to two years.