About Bankruptcy at Freedom Mortgage

Find the answers to questions that Freedom Mortgage customers frequently ask about bankruptcy

Filing for bankruptcy can affect your mortgage. In this article, you’ll find the answers to questions that Freedom Mortgage customers frequently ask about bankruptcy.

What Is Bankruptcy?

Bankruptcy is a legal process that helps individuals who cannot repay their debts. There are two common types of bankruptcy: Chapter 7 and Chapter 13.

What Is Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy can eliminate many unsecured debts, giving individuals a fresh financial start. It's sometimes called a liquidation bankruptcy because, in some cases, a court-appointed trustee can sell certain non-exempt assets to repay creditors. However, many people who file Chapter 7 keep all their property, because exemption laws protect essential assets.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy allows individuals with regular income to repay some or all their debts over a court-approved repayment plan that usually lasts for 3 to 5 years.

If My Bankruptcy Was Discharged, Why Is It Still Active?

When a bankruptcy is discharged, closing requirements still need to be met. Each state differs in its discharge process. In some instances, additional information is needed to close the bankruptcy.

Why Is My Account Still Showing Delinquent When I Am Making My Bankruptcy Payments?

This can be due to several reasons, but the most common reason is that the loan was already past due before the bankruptcy was filed, and the bankruptcy plan is paying the past-due balance over time. Another reason is when you’re making payments to the trustee, not directly to the creditor. The trustee will pay the creditor in monthly installments over the term of your bankruptcy plan.

Why Do I Have Fees Assessed on My Loan?

When a bankruptcy has been filed, your mortgage loan is referred to an attorney to perform certain legal actions on behalf of your creditor. The fees assessed may be associated with those actions and filed in accordance with Rule 3002.1.

Why Is My Loan in a Bankruptcy Status When Another Mortgagor Filed?

The mortgaged property is protected by the bankruptcy stay, and any interested party in the mortgaged property is impacted. This would include primary, secondary, coborrowers, and even third-party tenants.