Some debtors wonder if they need to continue making payments on their mortgage when bankruptcy is filed. Whether you file Chapter 13 or Chapter 7 bankruptcy and you have intentions on keeping your home, you still need to continue making payments. You should also continue making homeowner’s association payment dues. If you stop making either payment you could lose protection under the automatic stay which may start proceedings for foreclosure.
Bankruptcy is often sought to stop foreclosure from continuing. The automatic stay goes into effect which not only stops creditors from pursing collection attempts, it gives debtors additional time to sort out their situation and determine a solution. Chapter 7 bankruptcy allows qualifying debts to be discharged or eliminated. But if you file Chapter 7 and want to keep your home, you’ll be required to continue mortgage payments and association dues.
Chapter 13 bankruptcy is a reorganization repayment plan approved by the court. The plan includes scheduled payments based on your financial abilities. In Chapter 13 your mortgage payment may be included in your repayment plan. In most cases if you are behind on your mortgage your payments are made to the trustee. The trustee disperses payments to your creditors. Homeowner association fees can be paid and forwarded to the homeowner’s association by the debtor. If you are current with your mortgage payment when you seek Chapter 13 protection, it’s likely you can continue forwarding payments to your lender.