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Forbearance may affect bankruptcy filings in South Carolina

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When individuals are facing financial difficulties and have payments to make to lenders, they may consider entering into forbearance. Forbearance is a type of deferred payment plan that allows South Carolina residents and other individuals to make their payments at a later date than originally intended. While this option may be beneficial to some individuals, forbearance could have an effect on a bankruptcy filing.

If a deferred payment plan has been entered into between a mortgage lender and a borrower, bankruptcy could be considered a violation of the forbearance contract. Because bankruptcy halts foreclosure efforts with an automatic stay, mortgage lenders may file to have that automatic stay removed in order to proceed with the foreclosure. It is not unusual for the court to side with the lender and allow for foreclosure to move forward in cases of forbearance. 

Some individuals may believe that have a deferred payment plan may mean that they cannot file for bankruptcy. However, that is not necessarily the case. Forbearance may make the proceedings more complicated, but with legal assistance, individuals may still be able to move forward. Of course, it is up to the petitioner to keep up with the terms of his or her bankruptcy. 

Taking measures that seem necessary in order to handle a difficult financial situation may not always be easy. South Carolina residents may feel as if their circumstances are too complicated by forbearance to enter into bankruptcy in hopes of better managing their debt issues. However, interested individuals may wish to discuss their specific conditions with an experienced attorney in order to determine whether they may still be able to move forward with this debt relief option.

Source: thesequitur.com, “Considerations of Forbearance in Bankruptcy”, May 17, 2016