Bankruptcy and Your Home

We are bankruptcy attorneys located in Middletown, Ohio.  We specialize in Chapter 7 and Chapter 13 bankruptcy filings.

If you have found yourself in financial difficulty, you may be considering bankruptcy.  Bankruptcy allows you to to discharge all of your unsecured debt through a bankruptcy discharge.  In a bankruptcy you may be able to reorganize your debts to make your payments more manageable – or even eliminate your debts totally.

While a bankruptcy can help you get rid of your debt in general, you may want to recommit to the terms of your mortgage if you can afford to pay it and you want to keep the home.  The promise to repay a mortgage after bankruptcy is known as reaffirming your mortgage debt, and whether you have want to take this step depends on your circumstances and the type of bankruptcy you file.

WHAT DOES IT MEAN TO REAFFIRM YOUR MORTGAGE AFTER BANKRUPTCY?

A reaffirmation agreement is a legal contract that states your promise to repay all or a portion of your debt which you might have otherwise been released in a bankruptcy case.  Reaffirming your mortgage debt means recommitting to the terms of the loan and promising to pay it.  However, if homeyou default or fail to pay the mortgage, you could still face foreclosure.  If you decide to resign on your home you must commit to repaying this loan as if you reaffirm and then cannot make your payments you will have a foreclosure after your bankruptcy, this could lead to long term credit problems.  People usually file for bankruptcy because they cannot afford to meet their financial obligations, if that’s the case for you, reaffirming a mortgage debt might undue the positive aspects of bankruptcy.

WHY REAFFIRM YOUR MORTGAGE DEBT

If you are current on your loan payment and able to make future payments, reaffirming informs the lender that you intend to pay the mortgage.  This allows you keep your home during bankruptcy as long as you abide by the terms of the reaffirmation agreement and make payments.  When you reaffirm your debt this debt will report on your credit report and start rebuilding your credit right away.

If you do not reaffirm your mortgage debt, but continue to make payments, these payments may not be reported on your credit report.  These payments that you are making would not then be reported and will not help rebuild your credit.  Reaffirmation may also give you the chance to renegotiate the terms of your loan.

HOW TO KNOW IF YOU SHOULD REAFFIRM

Each situation is unique and differs based on your payment history and your ability to pay in the future.  If you are able to keep your mortgage debt, reaffirming may help ensure that the mortgage company will report your payments to the credit reporting agencies.

However, if financial difficulties prevent you from making this commitment and you want to be released from your mortgage in bankruptcy, you should not sign a reaffirmation agreement. Reaffirmation leaves you personally liable for the debt, and you cant’ walk away from it after bankruptcy.

You should work with a bankruptcy attorney to decide if reaffirming on your mortgage debt is in your best interest.

MORE INFORMATION

For more information check out our website at www.middletown-bankruptcy.com.

If you are struggling financially bankruptcy may be your best option.  Call today for your free consultation to discuss your individual situation.