Question by catfur4u: How does bankruptcy affect an adjustable rate mortgage???
My friend cannot keep up on bills her mortgage just rose -She was advised to go bankrupt -how can she keep her home?? And will the rates continue to rise as contracted.??? She is planning a chapter 13. She has no equity built up. Her condo’s value has dropped and is not able to refinance. She cannot sell without a loss.
Answer by acermill
She will lose her condo. The bankruptcy filing will delay that somewhat, but not by more than a few months. After the bankruptcy proceedings are completed, the lender will foreclose the property, and she will either leave willingly or be evicted.
What do you think? Answer below!
Filing bankruptcy doesn’t change the terms of the mortgage. However, filing a chapter 13 ill get her current on the mortgage if she is behind and she will pay some of her other bills but not all. If she cannot afford the increased payment, she might want to consider a chapter 7 and surrender the home instead, but not before trying to negotiate the terms of the loan first. With the mortgage crisis, the lender MAY be more amenable to negotiating the terms to make sure they don’t have to foreclose on yet another house. If the only reason she is having trouble is the adjusted rate, they may be willing to work something out (but honestly, I’m not sure that it is terribly likely)