November 16, 2017
As attorneys helping individuals who file for bankruptcy in the Los Angeles area, we are often faced with the question: “do I need to continue making my monthly mortgage payments on my home after filing a bankruptcy?” The simple answer is “yes”, if you want to keep the home.
Deciding What to Do With Your Home
Before deciding to proceed with bankruptcy, it is highly recommended that you sit with a qualified bankruptcy attorney and discuss your options. If you own a home, one of the biggest decisions you will need to make, even before filing the bankruptcy, is whether you would like and can afford the home you are currently living in. Yes, if money was not an issue, you would obviously want to keep your home; but, the main consideration is whether you can afford it, or whether your home is simply too “burdensome” no your finances. For example, if your monthly mortgage payment, including property taxes and property insurance, is $5,000 a month, and you are only earning $1,000 a month, you should probably get rid of your home. Admiringly, it is very hard to get rid of a home, but sometimes the turns you take in life might put you in a situation that requires some change.
If you decide to give up on your home, bankruptcy will let you “surrender” the home; in other words, you will no longer have to make any mortgage payments and the bank will likely proceed with a foreclosure of the home. In Los Angeles, and the rest of California, foreclosures can take between 4-5 months (or more) and so you will get time to gather your things before having to leave your home.
If you decide to keep your home, you will need to show that you can actually afford it. If you file a Chapter 7 case, you will need to keep current on your mortgage, or the lender may have the option to get “relief from the automatic stay” and proceed with foreclosure. Your failure to make monthly mortgage payments will not, however, affect your ability to get a discharge or continue with the Chapter 7 case. On the other hand, if you file a Chapter 13 case, the Central District of California (including Los Angeles, Santa Ana, San Fernando Valley, and surrounding areas) requires that mortgage payments be made throughout the Chapter 13 case; otherwise, the lender could see relief from the automatic stay and/or move to a dismissal of your chapter 13 case. A Chapter 13 is focused on showing that the Debtor can reorganize, or make payments, so debtors are expected to perform on their mortgage.
Consult With A Qualified Los Angeles Attorney Now!
If you are thinking about filing a bankruptcy and you own a home, contact our qualified attorneys at Katz Law now! We are California attorneys located in Los Angeles who have experience dealing with mortgage-related and bankruptcy issues.