What happens to a home mortgage in bankruptcy?

A home mortgage in bankruptcy is treated like any other type of debt. The type of bankruptcy you file does play a role in how this debt is treated, but the underlying goal for most filers is to remain in their home. To do this, you must get caught up on your loan. Mortgage loans are a type of secured debt and as such, the lender does have rights to your home even in the bankruptcy process. Consult an attorney if your home is at risk of being lost.

Home Mortgages in Bankruptcy

If you file bankruptcy, your mortgage is taken into consideration alongside any other debts. Consider the following scenarios.

• If your home loan is up to date and you wish to remain in your home, you may reaffirm the loan and remain in the home.
• If your home loan is up to date, but your home’s equity (the un-mortgaged value of the home) is higher than the exemption limit available, you may lose your home. The bankruptcy trustee may force the sale of the home and use the profit to pay back your other lenders.
• In situations where you are behind on your mortgage, you may be able to stop the foreclosure process for a limited amount of time until you can work to an agreement with the lender.
• If you cannot come to an agreement with a lender, and your mortgage is behind, you may lose your home to the lender through foreclosure.

A home mortgage in bankruptcy is a serious debt that may lead to the loss of the home. Discuss your options with your attorney before you file bankruptcy.