Have you fallen behind in your mortgage payment? Do you worry about losing your house or creditors calling you? If so, you are not alone. Since 2008, many people have had to leave their homes because they could not keep up with the monthly payments and were eventually foreclosed on. Thousands of homes sit empty because people bought homes with alternative mortgages such as 0% down or adjustable rate mortgages.
If you now find yourself unable to keep up with your mortgage payments, you have a few options.
Can You File for Bankruptcy on Your Mortgage Alone?
If you are behind on your mortgage payment but not on the rest of your obligations, unfortunately, you cannot file for mortgage bankruptcy alone. Likewise, if you are behind on your second mortgage but not your first, you can’t file for bankruptcy on just the second mortgage.
When you file for bankruptcy, you must include all of your debts. Creditors can no longer contact you about repayment. If you file for Chapter 7 bankruptcy, you will lose your home as it will be liquidated to help cover your debts. If you can afford to make payments on your debts, a far better choice is to file for Chapter 13 bankruptcy as your home and retirement, among other assets, will be yours to keep.
What Other Alternatives Are There to Filing Bankruptcy?
If you only want to file bankrupcty due to your mortgage, you have a few other options available instead of filing bankruptcy.
1. Apply for a mortgage modification. Many, many Americans have been able to keep and stay in their homes over the last several years thanks to loan modifications. You can apply for a loan modification whether you are current in payments, behind, in foreclosure or filing for bankruptcy. The bank often prefers to work with you on a mortgage modification so that they can get their money. Foreclosing on your property also costs the bank money and time that they would rather not spend.
2. See if you have enough equity in your first mortgage to become current on your second. If you are current on your first mortgage but behind on your second mortgage, you can see if you have enough equity in the home to refinance. You can then take the money from the first mortgage to help you become current with your second mortgage.
3. Stop making payments temporarily. If you simply need some breathing room financially, you can stop making payments temporarily. The bank will eventually begin the foreclosure process, but in some states, when you make another payment, the foreclosure process has to start all over again from the beginning. Of course, this is not the ideal way to go. Some people believe this is unethical, and you do run the risk of losing your home.
If you are behind on your mortgage and considering filing bankruptcy, remember that there are other alternatives before you take such a drastic step as filing for Chapter 13 or 7 bankruptcy. Often the best choice is to contact the bank, explain your situation and see if they will be willing to work with you.