If a homeowner declares bankruptcy, canthey put off having to pay theirmortgage for an amount of time?
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If a homeowner declares bankruptcy, canthey put off having to pay theirmortgage for an amount of time?
I have a friend considering filing for bankruptcy and he is a homeowner. He’s curious as to whether or not he could get out of paying off his mortgage for a bit of time.
Asked on September 3, 2010 under Bankruptcy Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Once bankruptyc is filed, all debt payments and debt collection efforts are automatically "stayed," or deferred, for a period of time. However, for secured debts, like a mortgage, this may or may not be helpful: in order to keep the home, the homeowner will still have to pay his/her mortgage--otherwise, the lender can foreclose--so not only will any stayed payments have to be made up later (they don't go away), but I believe interest will continue to accue while payments are stayed.
Decideding whether to file bankruptcy, which one to file (the two main ones for private citizens, Chapter 7 and Chapter 13, are VERY different), and how best to maximize benefits under bankruptcy, are all very complex; your friend should consult with a bankruptcy attorney, rather than try to do this himself. Whatever he pays in lawyer fees will likely be recouped, with "interest," in terms of making better use of the bankruptcy law.
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