QUESTION
Is it true that if you are behind on your mortgage that you cannot file bankruptcy?
Asked on Feb 06th, 2013 on Bankruptcy - Minnesota
More details to this question:
A friend has been fighting her mortgage and others for years. She owes like $70k on a mobile home worth about $30k. I told her to file bankruptcy because of everything. She is on Social Security and makes very little to live on. The attorney she went to told her two things that I don't agree with. First, that it costs extra money to have the mortgage added into the bankruptcy to stop the foreclosure process. Secondly, after taking her $810, he tells her that she can't file bankruptcy if she is behind on her mortgage. I think that was part of the reason for the bankruptcy in the first place, because she cannot afford her payments.
15 ANSWERS
No. That is not true at all. There may be reasons why she can't file a 7 (like having filed one within 8 years). There may be reasons she can't file a 13 (like not having disposable income). Neither includes being behind on your mortgage. This attorney may only do 7's and was telling her she couldn't save her house in a 7 if she is behind. Not the same thing.
Answered on Feb 11th, 2013 at 12:40 AM
Either your friend consulted with an attorney that never does bankruptcy or she seriously misunderstood the attorney or she is making up a story to excuse her decision not to do anything. It costs no more to list a mortgage in a bankruptcy than to list any other creditor, and a major reason people file bankruptcy is to delay or prevent a foreclosure. However, the devil is in the details. You can't file bankruptcy & expect to get a house for free. You have to come up with a strategy to catch up on the past due payments or be prepared to ultimately lose the property. The most common ways people have to catch up is with the Chapter 13 program, which gives them up to 5 years to catch up, or a mortgage loan modification. Mobile homes, unless parked on land the person owns, do not qualify for any modification programs. The choice your friend may have made but doesn't want to tell you is that she will wait until she loses the mobile home & then file bankruptcy.
Answered on Feb 07th, 2013 at 2:33 PM
If you file bankruptcy, you must list all debts including a mortgage. In her circumstances, however, a bankruptcy may not be necessary if her only income is social security.
Answered on Feb 07th, 2013 at 2:33 PM
Estate Planning Attorney serving Wilmington, DE
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Reger Rizzo & Darnall, LLP
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You can file a Chapter 13 but she would need to be able to pay her mortgage arrears through the Plan. She can file a Chapter 7 but would need to surrender the home.
Answered on Feb 07th, 2013 at 2:32 PM
Bankruptcy Attorney serving Phoenix, AZ
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Law Office of D. L. Drain, P.A.
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What? That makes no sense. Tell her to ask for a refund of the retainer. If the attorney will not return it then file a complaint with the State Bar. Next, tell her to talk to a competent bankruptcy attorney. Bankruptcy is a very complicated process. It is wise to talk to an experienced bankruptcy attorney before deciding to take this important step.
Answered on Feb 07th, 2013 at 12:21 AM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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He is wrong, you can repay mortgage arrears in a chapter 13 bankruptcy as long you remain current.
Answered on Feb 06th, 2013 at 11:48 PM
Chapter 7 Bankruptcy Attorney serving Milwaukee, WI
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Law Offices of Deborah A. Stencel
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If you wish to file bankruptcy to save your home from foreclosure, you need to file a Chapter 13 Bankruptcy. Chapter 13s generally are more expensive than Chapter 7s. It is not necessarily advisable to file a Chapter 7 while you are behind on your mortgage if you wish to keep the property, but it is not against the rules. Again, the Chapter 7 will not help with the foreclosure situation.
Answered on Feb 06th, 2013 at 11:39 PM
Complex Litigation Attorney serving Costa Mesa, CA
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Thomas Vogele & Associates, APC
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Your friend needs to get her money back and find another lawyer. If she is behind on her mortgage and other dents, she may file bankruptcy to stop collection efforts and forestall a foreclosure action. If she wishes to retain the mobile home, she will have to indicate that on her petition and she will remain liable for the debt post-discharge.
Answered on Feb 06th, 2013 at 11:05 PM
Deborah F. Bowinski
It sounds as though your friend may be confused. If she files a chapter 7 bankruptcy while she is behind in her mortgage, the lender will request that the court relieve them from the automatic stay (that is the Order that protects a person from creditor action) and allow them to proceed with foreclosure or repossession. She can file her case, but it would not protect her from the mortgage lender taking the home. If she is prepared to lose the home and move, then a chapter 7 filing would give her protection from the debt.
Answered on Feb 06th, 2013 at 10:40 PM
Donald C. McLeaish
File bankruptcy does not eliminate mortgage...but why pay $800.
Answered on Feb 06th, 2013 at 10:39 PM
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If she files Chapter 7 bk it will delay the foreclosure but will not prevent the bank from ultimately foreclosing on their collateral. She will receive a discharge of any deficiency owed the bank.
Answered on Feb 06th, 2013 at 9:35 PM
Bankruptcy Law Attorney serving Austin, TX
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Law Office of Susan G. Taylor
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She should have come to me. Don't know the entire fee charged, but it sounds odd to charge more than the base due to a mortgage arrearage problem. If your friend's goal is to keep the home, she would need to catch up before filing. But if she intends to surrender the home in the bankruptcy, it would be crazy to catch up payments. She might even be able to redeem a manufactured home in a bankruptcy, that is, pay only what it's worth, not what she owes.
Answered on Feb 06th, 2013 at 9:31 PM
Chapter 13 Bankruptcy Attorney serving Winston-Salem, NC
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Love and Dillenbeck Law
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The attorney was 100% correct. In a Chapter 13 if you file to save your home, you make the regular monthly payment, plus an additional amount to catch up the arrears in addition to a fee to pay the Chapter 13 trustee. In a Chapter 7, it does nothing to save the home and in fact can prompt a mortgage company to move faster in foreclosing. It is best to try and work out a modification agreement and then file a 7 to kill all of the other debt. A 13 will save the home if your friend can afford it.
Answered on Feb 06th, 2013 at 8:29 PM
Bankruptcy Law Business Attorney serving Asheville, NC
Partner at
Pitts, Hay & Hugenschmidt, PA
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That is absolutely untrue. The Bankruptcy may be useful in bringing the payments current.
Answered on Feb 06th, 2013 at 8:19 PM
Chapter 13 Bankruptcy Attorney serving Bloomington, MN
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Gregory J. Wald
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The mortgage might have something to do with how much the attorney is charging. It may be that there is more work involved because of the mortgage. The attorney is free to charge a reasonable fee for the work that he expects to perform. A person can file bankruptcy if they are behind in their mortgage. I often file Chapter 13 cases to help people keep their homes when they are behind in their mortgage payments. However, it is also possible that she is confused about what the lawyer is telling her.
Answered on Feb 06th, 2013 at 8:18 PM