Can you reaffirm your mortgage after bankruptcy?

Can you reaffirm your mortgage after bankruptcy?

The Bankruptcy Code requires the reaffirmation of debts secured by personal property (like car loans) and gives filers the option to voluntarily reaffirm their mortgage debt.

Can you get your house back after bankruptcy?

If you’ve gone through a Chapter 7 bankruptcy, you need to wait at least 4 years after a court discharges or dismisses your bankruptcy to qualify for a conventional loan. Government-backed mortgage loans are a bit more lenient. You need to wait 3 years after your bankruptcy’s dismissal or discharge to get a USDA loan.

Why do you have to reaffirm your mortgage in bankruptcy?

Reaffirming a mortgage in bankruptcy re-establishes the borrower’s personal liability for the entire loan. Lenders, of course, want people in bankruptcy to reaffirm their mortgages because it increases their chances of recovering all the money they’re owed. Theoretically, a bank could seize the home of a borrower who refused to reaffirm.

What happens to your mortgage when you file bankruptcy?

When you file for Chapter 7 bankruptcy, your personal responsibility for paying your mortgage will be wiped out. That doesn’t mean your mortgage disappears, however. What it does mean is that your can’t be held responsible for any shortfall if you fall behind and the lender sells the property at a loss.

Can a person stay in their home after bankruptcy?

If your home equity is exempt, you can stay in your home after bankruptcy — but your mortgage debt doesn’t go away. You have to keep making the payments or the lender will foreclose. The question at this point is whether you must “reaffirm” the debt on your home.

What happens if I don’t sign a reaffirmation agreement?

If you do not sign a reaffirmation agreement, it is unlikely that a company will begin foreclosure proceedings as long as you remain current on your mortgage payments and do not breach other terms of the mortgage note, such as keeping the home insurance and paying property taxes. Most mortgage companies want to avoid foreclosure if possible.

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