May 21, 2020
Our Los Angeles bankruptcy attorneys have significant experience in handling mortgage-related issues in bankruptcy in light of the years of experience in handling such claims. While many individuals who file bankruptcy in Los Angeles do not own a home, there is a significant amount of individuals who are still eligible to file a bankruptcy despite owning a home – even if the home has equity (like most do now).
Treatments of Mortgages in the Different Bankruptcy Chapters
During both Chapter 7 and Chapter 13 bankruptcy cases in Los Angeles, in order to keep a property and avoid a foreclosure, the borrower must continue making mortgage payments. Bankruptcy does not absolve one from having to continue making mortgage payments.
Before deciding to proceed with bankruptcy, it is highly recommended that individual considering bankruptcy in Los Angeles consult with a qualified bankruptcy attorney in Los Angeles and discuss his/her options. It is first important to determine if the debtor can afford the home he/she is in and can continue making the monthly mortgage payments. In tough times, like during the Coronavirus pandemic, many individuals lost their jobs which made it hard to keep making mortgage payments. If so, then a strategy must be created on how to proceed with the bankruptcy.
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. Generally, individual who seek to keep their home and cure any mortgage default tend to choose Chapter 13 over Chapter 7.
If the Debtor files 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 afford to reorganize and pay back debts. As such, debtors in bankruptcy are expected to perform on their mortgage. What one can do in a Chapter 13 versus a Chapter 7 case is cure a mortgage default. That is, Chapter 13 provides bankrupt debtors with the ability to cure their mortgage over some time (between 3 to 5 years) while still living and enjoying the home.
Consult With A Qualified Los Angeles Attorney Now!
If you are thinking about filing a bankruptcy and have a mortgage, contact our qualified attorneys at Katz Law now! We are California bankruptcy attorneys located in Los Angeles who have experience dealing with mortgage-related and bankruptcy issues.