What happens if your mortgage company files Chapter 11?

Yes, if your mortgage lender goes bankrupt, you do still need to pay your mortgage obligation. If your mortgage lender goes under, the company will normally sell all existing mortgages to other lenders. In most cases, the terms of your mortgage agreement will not change.

Can a company still operate after Chapter 11?

A company’s securities may continue to trade even after the company has filed for bankruptcy under Chapter 11. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares.

What happens if my mortgage bank goes bust?

What about my mortgage? If your bank or building society goes bust you will not have your mortgage cancelled. The administration process would see that debt sold onto another bank or building society, or potentially an investment firm, and you would then owe them the money.

Can a Chapter 11 debtor retain their home?

While debtors in a Chapter 11 or 12 bankruptcy may also seek to retain their residence, this Note addresses only individual Chapter 7 and 13 bankruptcies because individual Chapter 11 and Chapter 12 cases are less common. A Chapter 7 debtor has several options to retain real property encumbered by a loan.

What are the duties of a mortgage servicer?

The servicer can be the loan owner or the owner can sell the right to service the loan to another company. The duties of the servicer include: managing foreclosures. Debtors in both Chapter 7 and Chapter 13 bankruptcy may seek to retain their primary residence in bankruptcy.

What happens to mortgage debt after a Chapter 7 discharge?

Unless the debt has been reaffirmed, a Chapter 7 discharge relieves an individual debtor from personal liability for mortgage debt and prevents the mortgage servicer from taking any collection actions against the debtor personally. For more information on Chapter 7 bankruptcy, see Practice Note, Chapter 7 Liquidation: Overview (W-000-6231).

When to file a chapter 13 mortgage case?

A Chapter 13 debtor will typically elect to file a Chapter 13 case to keep the family home. Generally, this is done when a Chapter 13 debtor chooses to catch up on past due payments and make go forward payments under the terms of the Chapter 13 plan of repayment.

Can you get a mortgage after a Chapter 11 bankruptcy?

To get a government-backed mortgage after a Chapter 11 bankruptcy, you must make at least 12 on-time monthly payments into the plan and get approval form the bankruptcy judge. For conforming (Fannie Mae and Freddie Mac) loans, the waiting period is two years after discharge.

Can you get a Fannie Mae loan after Chapter 11?

You cannot qualify for a loan while in a Chapter 11 repayment plan under conforming (Fannie Mae and Freddie Mac) loan guidelines. There is a two-year waiting period after the Chapter 11 bankruptcy discharge date. There is a four-year waiting period after the Chapter 11 bankruptcy dismissal date.

How does a Chapter 11 bankruptcy plan work?

A Chapter 11 bankruptcy can be likened to a very contentious election. Each class of creditors (priority, secured, and unsecured) are entitled to vote to accept or reject your proposed treatment of them in your bankruptcy plan. After the initial hearings, the court will authorize you to start soliciting votes.

What are the repayment times for Chapter 11?

While Chapter 13 repayment plans are normally 60 months, Chapter 11 repayment times are open. However, most Chapter 11 repayment plans do not exceed 24 months. The filing costs and fees for Chapter 11 are substantially more than Chapter 7 and 13.