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Should I Pay My Mortgage During Bankruptcy?

Your mortgage represents a significant chunk of your monthly expenses, and it may even be the reason why you’ve fallen into debt in the first place. Whether or not you should continue paying your mortgage is a decision you should make based on the type of bankruptcy you intend to file, your personal financial situation, and the advice you receive from a qualified bankruptcy lawyer.

The Type of Bankruptcy Matters

When it comes to paying your mortgage during bankruptcy, the type of bankruptcy you choose – and the reasons you chose it – matters a great deal.

Most people file for Chapter 7 bankruptcy when they have considerable consumer debt, often caused by things like credit card bills and medical expenses. If you’ve stayed on top of your mortgage payments despite dealing with this other debt, you will probably wish to continue paying your mortgage to prevent foreclosure. You can discharge your other debt and protect the equity in your home (up to $678,378) from liquidation by selecting the 704 Series exemptions.

When the bulk of your debt consists of missed mortgage payments, you might want to consider Chapter 13 bankruptcy. This type of bankruptcy reorganizes your debt into a single repayment plan that lasts three to five years. This can provide you with the time you need to catch up with missed mortgage payments while staying on top of new ones, protecting your investment in your home!

Importantly, bankruptcy of any kind can provide you protection from your creditors while your case is open. This means foreclosure, wage garnishment, bank levies, repossession, and other forms of collection should cease unless a judge grants injunctive relief for a creditor.

Pros & Cons: Paying Your Mortgage During Bankruptcy

The decision to pay your mortgage during bankruptcy is a personal one, and whether or not it’s the right option for you depends on a variety of factors. Before deciding which path to take, consider both the pros and cons associated with paying your mortgage during bankruptcy.

On the one hand, continuing to pay your mortgage can help you protect your most valuable asset. If you can make your payments, your equity in the home will remain intact. Additionally, depending on your specific situation, continuing to pay off your mortgage may help improve your credit score after bankruptcy because you can demonstrate that you can keep up with loan payments.

On the other hand, making mortgage payments during bankruptcy can be expensive and leave you with less money for other creditors. Depending on the amount of debt you have, it may be more financially beneficial to surrender your home and use the money to pay off other debts. Additionally, if your is worth less than what is owed on it, continuing to make payments may not be a wise decision.

Regardless of which option you choose, it’s important to understand the pros and cons associated with paying your mortgage during bankruptcy. Be sure to speak to a financial advisor or lawyer before making any decisions because they can help you determine which path is best for your unique situation.


If you are on the fence about bankruptcy or unsure about how to handle your mortgage during this time, you can consult with our experienced attorney at Nguyen Law Group for personalized assistance. After assessing your unique situation, we can provide the legal insight and services you need to make the decisions that can lead to favorable outcomes.

For more information about how Nguyen Law Group can help, contact us online.