What to do when my mortgage forbearance ends?

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What to do when my mortgage forbearance ends?

by | Nov 9, 2021 | Bankruptcy, Firm News

The answer depends on your specific situation.

If you have missed a payment on your mortgage or your payments have been in forbearance due to the COVID-19 Emergency, then you still owe the payments that you missed.  The payments that you missed are called arrears.  If you would like to keep your home, then your mortgage company will likely offer a few options to cure the arrears.  Below are a few of these options:

  1. Repayment plan. If you can afford your regular monthly payment plus a little extra each month.  Then this option may be best for you.  A repayment plan adds the arrears to the regular monthly payment plan over a period set by the mortgage company.  Example: If your monthly mortgage payment is $1,000 and your arrears are $3,000, a repayment plan over a year would require you to pay the regular monthly mortgage payment of $1,000 plus $250 a month for the arrears over one year.  After the arrears are paid, your monthly mortgage payment will return to $1,000 a month.
  2. Payment Deferral. The payments will be made up at the end of the term of the loan.  This option may be right for you if you are only able to make your regular monthly payment on your mortgage but pay no extra for the arrears.  Example:  If you have 200 payments left on your mortgage and you missed 5 monthly payments, then the 5 missed monthly payments will be added to the end of the term.  This means you will have 205 payments left on your mortgage.
  3. Loan Modification. This option would be best for you if you are unable to make the regular monthly mortgage payments.  Your loan would be modified, and the term will likely be extended to allow for a lower monthly mortgage payment.
  4. Lump Sum payment. This option is may be best for you if you can pay the regular monthly payment and a lump sum payment for the arrears.  If you have a federally backed loan, then your mortgage company cannot require a lump sum payment.
  5. Chapter 13 Bankruptcy. In a Chapter 13 plan, you and your attorney will calculate a monthly plan payment which will include your monthly mortgage payment and the arrears on the mortgage.  The Chapter 13 plan will allow you to keep your home and get current on the mortgage over 3 to 5 years.  This option is best if your mortgage company is not willing to work with you on the arrears or if you have other debt.  For instance, if you are also behind on your car payment, credit card bills, medical bills, etc.
  6. Chapter 7 Bankruptcy. If you cannot afford your mortgage payment and the mortgage company is not willing to modify your mortgage, then depending on your eligibility you may need to file a Chapter 7 bankruptcy to surrender your home and get rid of the debt for your home.  I know that is a scary thought.  No one wants to hear that they need to move from the safety of their home.  However, sometimes you need to restart your finances in order to start over.  After you get rid of your debt, you can purchase another home.  This time with a monthly payment you can afford because you are no longer tied down by your old bad debt.

 

Please contact your mortgage company directly for your individualized options.  For more information regarding COVID-19 Mortgage Forbearance, please visit: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/help-for-homeowners/repay-forbearance/

If you are unable to receive the help you need from your mortgage company or you owe additional debt, bankruptcy may be able to help.  Schedule an appointment today for a free initial consultation by calling 1-800-New-Start or contact us. 

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