What happens to a person's mortgage payments when they file for bankruptcy? Do just the late fees go away?

Question

I was looking to buy I house that some friends of freinds owned. I had been told they were going to lose the house due to foreclosure. They ended up filing for bankruptcy. What happens with this house case? Are they just forgiven for missed payments and late fees or is there a chance they can lose the house after all? I am still interested in the property. I don't know them well enough to bring this up with them personally. From what I understand thgey had already made alterntive living arrangments. I'm just trying to gauge what my chance of acquiring this property is

Answer 1

bankrupcy laws have recently changed, but in the past it was possible to declare bankrupcy and keep your home, assuming the discharge of other debts would leave you enough income to make your house payments. A judge could set aside any and all obligations not specifically excluded, but if you choose to retain the collateral of a loan, in this case the home, you of course have to pay for it in some way.

so yes, I would assume the bankrupcy judge might set aside the fees and fines but probably not the mortgage payments themselves if the filer wanted to try to keep the home.

I think this is less common now, and the court would probably expect the bankrupcy filer to move to more economical housing than a single family house.

The best way to get the property cheap is to contact the lender and tell them you are interested in acquiring the home should it become available. then check in from time to time with the lender. They won't offer the best price in the beginning, you have to name a low price and then keep expressing interest. eventually the bank will either sell it to someone else or take your deal.

Answer 2

Filing bankruptcy results in an automatic stay of all debt collection actions. However, the mortgage lender can ask for permission to avoid the automatic stay, and he will almost always get it, because he has collateral in the property. The owners will be allowed to keep the house ONLY if they continue making mortgage payments (and all associated fees such as late fees) in full. If the owners don't pay the bankruptcy judge will let the lender foreclose.

Answer 3

Laws are different from state to state. I live in Florida, if I filed bankruptcy my home is protected by state law. A creditor can put a lean on my home, but cannot take it until I die, but the bankruptcy would remove the lean.

Answer 4

I would suggest you read the article "New Bankruptcy Law – Where’s The Consumer Protection?" you can view it at:
http://www.sandiegolawyerforyou.com/san-diego-bankruptcy-law-update.htm
http://www.new-jersey-lawyers-directory.com
http://www.las-vegas-nevada-lawyer-attorney-legal-injury-defense-directory.com/las-vegas-bankruptcy-lawyers.htm
http://www.san-francisco-oakland-bay-area-lawyers-attorneys-directory.com
http://www.san-jose-ca-lawyers-attorneys-directory.com
http://www.sacramento-ca-lawyers-attorneys-directory.com
http://www.la-orange-county-lawyers-attorney-directory.com

Answer 5

Another consideration is that if they need to move, they will be motivated to sell it to you. That would be helpful to them as it would allow them to make the sale minus the realtor fees.

Answer 6

Only their lawyer can answer those questions