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“What happens to my mortgage in bankruptcy if I have not been paying?”

If your goal is to keep your house and you are behind on your mortgage, you will likely need to file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy plan will need to propose a payment that is, at a minimum, sufficient to pay off all of your pre-petition mortgage arrears in no more than 5 years. There are a number of other factors that go in to determining your total monthly plan payment (such as your total household income, the liquidation value of any non-exempt assets, your total monthly expenses, etc.). The good news, however, is that if you are able to propose a plan that meets the requirements of the bankruptcy code, as long as you make the monthly plan payments and make your post-petition mortgage payments, then you will be able to keep your house. If you are not able to make the plan payments, or if it becomes clear that you will need to file a Chapter 7 case (because you cannot propose a confirmable Chapter 13 plan) then the automatic stay will work to delay, but not prevent the eventual foreclosure on your house.

If your goal is simply to avoid a collection action after a foreclosure for the deficiency (the debt that is not eliminated by the sale of the house), then you may be best off by filing a Chapter 7 case in the first place (assuming you qualify under the means test). Chapter 7 does not have a legal element to help you to avoid the foreclosure, however, the automatic stay will allow you to delay the inevitable somewhat. In any event, Chapter 7 is relatively quick, and at the end of the case you will most likely have discharged your credit card debt and your personal obligations under the mortgage.

Before you decide which Chapter of bankruptcy is best for you and your particular goals, you should consult with a qualified bankruptcy attorney. To schedule a no-obligation, no-cost consultation, call the Law Office of James Wingfield at 508-797-0200 or visit the contact page on our website today.

2 Responses to “What happens to my mortgage in bankruptcy if I have not been paying?”

  1. […] But what about Creditor Y who sued you before you filed for bankruptcy, received a judgment and, in conjunction with the judgment received a judicial lien on your personal property, bank account or home?  Can Creditor Y exercise its rights under the lien?  The answer to that question is a bit murkier.  In bankruptcy a simple discharge does not, in and of itself, remove a lien that was valid at the time of the bankruptcy petition.  Accordingly, a homeowner can file for bankruptcy and in no way disrupt the property rights of the mortgage holder.  A mortgage holder whose debt is not paid per the original contract cannot sue the debtor post discharge to recover a deficiency, but can take the property back with a foreclosure if the debtor fails to make payments. […]

The Law Offices of James Wingfield is proud to be a debt relief agency. We help the individuals, families and small businesses of the Worcester area file for bankruptcy relief under the United States Bankruptcy Code. The Law Offices of James Wingfield serves Central and Western Massachusetts clients in Worcester County, Hampden County, Hampshire County and Middlesex County including Worcester, Shrewsbury, Springfield, Westborough, Southborough, Framingham, Northampton, Natick, Amherst, Fitchburg, Leomister, Douglas, Uxbridge, Gardner, Belchertown, Holyoke, Wilbraham and Chicopee. The information contained and obtained in this website does not, nor is it intended to be, legal advice. Contacting us, be it through this website, via email of by telephone does not create an attorney-client relationship. An attorney-client relationship is only created upon execution of an engagement agreement or fee agreement.