Bankruptcy and Your Home Mortgage in Minneapolis, Minnesota
When you file for bankruptcy, you will list your creditors. This includes secured creditors like mortgages. In your bankruptcy schedules, you will state what you plan to do with debt/asset. You can either surrender the property, or continue to pay on it.
If you state that you want to surrender the property tied to your mortgage when you file for bankruptcy, the lender may either file a Motion for relief to start foreclosure procedures during the bankruptcy or wait until the plan confirmation for a Chapter 13 or until the discharge for a Chapter 7. They can then proceed with the normal foreclosure process after the discharge or relief has been granted. If you plan to keep the home and continue to pay on it as normal, you’ll continue to pay the mortgage to the mortgage lender on the due date. Due to the automatic stay that stops creditors from collecting debts, your mortgage lender may stop automatic payments and online access when a bankruptcy is filed. You can still make payments on the property but you’ll have to do so by phone, mail or online. You may be able to continue using the online service, but you’ll need your attorney to authorize it. Due to the automatic stay, the mortgage company will stop reporting on your credit reports. You may not receive any more statements, but with your attorney’s permission, you can still contact the mortgage company to discuss your account. If you want to keep the property that is secured by a mortgage and file bankruptcy, make your regular monthly payments.
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