When homeowners fall into debt, they may get into a situation where their mortgage is only one of their many types of debts, and they may struggle to keep up with repayments on this loan as well as others. This is particularly common when a person has unexpectedly lost their job or source of income.
If you start to default on your mortgage repayments, you will face the threat of losing your home. When you realize that you will potentially have a problem in making your mortgage repayments, it is important that you take action to inform your lender and to consider the options that you have at your disposal.
Should I file for bankruptcy immediately?
Filing for bankruptcy is not the first thing that you should do after realizing that you may have a problem paying your mortgage going forward. You should first contact your bank and consider what you can do about the issue. They may grant you a holiday from payment obligations so that you can focus on getting back on track, and then filing for bankruptcy will not be necessary. However, if you have complex debt and income issues, bankruptcy may be the best way forward.
Is it possible to file for bankruptcy without losing my home?
This depends largely on the type of bankruptcy you file for and the specifics of your situation. If you file for Chapter 13 bankruptcy, you’ll participate in a repayment plan. Therefore, you will not need to liquidate any assets as part of the bankruptcy process. However, if you file for Chapter 7 bankruptcy, you will need to liquidate assets, including property, in order to pay off debts. Filing for bankruptcy will almost certainly delay the repossession of your home because of the automatic stay that is put in place.
If you are currently struggling financially, it is important that you take action to understand the options that you have and learn whether bankruptcy is the right choice for you.