Chapter 7 bankruptcies are a popular choice for individuals and couples who are facing overwhelming debts. Filing for bankruptcy under Chapter 7 can help debtors tackle their financial issues in a matter of months, helping them to gain a complete fresh start.
Although there are countless advantages to filing for Chapter 7 bankruptcy, there is one significant drawback. Homeowners who are filing for bankruptcy often have to give up their homes in order to liquidate this asset. During the bankruptcy filing, the bankruptcy estate has control over your property, and therefore you will be limited in the actions you can take regarding property you own or are buying.
What types of mortgage modifications are available?
There are several possibilities when it comes to making your mortgage more affordable. You may want to extend the length of the mortgage, ask for a lower interest rate or use the equity in the home to increase your mortgage.
Can I modify my mortgage during bankruptcy?
If you are in the process of Chapter 7 bankruptcy and you want to modify your mortgage to make it is more affordable, you’ll need to learn whether the bankruptcy trustee has taken action in abandoning the property or not.
If your home has not already been liquidated, you can apply to your creditor to modify the mortgage. If the mortgage modification application is accepted, it will be necessary to get the court’s approval of the modification.
If you are struggling to pay off debts while dealing with an unaffordable mortgage, it is important that you understand your options when filing for bankruptcy.