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Which post-bankruptcy home payments matter?

Florida residents who are considering bankruptcy may have some questions, particularly if they own their own homes. Some may ask if they would still be liable for mortgage payments if their homes were discharged in bankruptcy, especially if they had been living in the home and making payments after the discharge. A financial planner offers the following advice, which might be helpful; however, the information is general and may not pertain to everyone.

In order to re-establish liability, people would have to refinance or reaffirm their mortgages. However, those thinking of including their homes in bankruptcy filings should consider that a foreclosure would have a negative effect on their credit reports.

Mortgage payments and credit reports may not be the only complications as far as filing bankruptcy is concerned. For example, property insurance could be an issue if neither the owner nor the lender chooses to make payments. It is important to insure that the lender is paying the property insurance, because if that is not the case, the property owner could be held responsible for any damage that occurs between the time the property is abandoned and the time another party purchases it.

If property owners are required to pay homeowner association dues, they should continue to do so, as dues that are owed after the date of filing bankruptcy continue to be the homeowner's responsibility. In fact, former property owners with homeowner association delinquencies can still be sued several years after filing bankruptcy.

Those listing their homes as part of bankruptcy settlements might benefit from quick foreclosures, but that may not always be the case. It is important for homeowners to understand their liabilities so they are not held accountable for any outstanding balances related to their prior homes.

Source: FOX Business, "Which Home Payments Matter after Bankruptcy?", Justin Harelik, November 06, 2013

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