What happens if my mortgage company is in the process of bankruptcy?

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What happens if my mortgage company is in the process of bankruptcy?

Do I need to refinance with another mortgage company? do I still need to pay them? What happens if mortgage company don’t pay property taxes?

Asked on July 21, 2012 under Bankruptcy Law, Illinois

Answers:

Terence Fenelon / Law Offices of Terence Fenelon

Answered 9 years ago | Contributor

Two questions in one.  Of your mortgage company has filed for bankruptcy, the assets of the company, including your debt, will be picked up by another entity.  If the filing is under Chapter 11 of the code, the mortgage company will still be able to continue business, including enforcing your debt owed to them. Also, they will be held responsible for escrow payments which you have deposited to pay your taxes.  Such accounts are a priority in a bankruptcy proceeding and must be paid as they are non-dischargeable. 

I would monitor the payment of the taxes carefully to ensure that they are paid in a timely manner.  If not, seek legal counsel quickly.


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