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Housing options after bankruptcy

Deciding to file for bankruptcy may have provided you with relief from creditor harassment and the constant stress of incoming bills you are not able to pay. You may be wondering, though, how it will affect your living situation.

Although you could choose to rent a home or apartment, you may have alternatives that would suit you better.

Reaffirming the mortgage

You can typically reaffirm the contract with your lender. This legally binds you to the loan, just as the original contract did. So even though the bankruptcy wipes out all your debts, your mortgage stays the same, and you get to keep the home. There may also still be a lien on the property, which allows the lender to foreclose on the house if you fall behind on the payments. 

Staying in your home

Even if you can now make your house payment comfortably, you may be hesitant to reaffirm your mortgage and commit to the home over the long term. Your recent bankruptcy may make it difficult to move right away, too. However, as long as you are not behind on your payments, you may continue to live there indefinitely.

The bankruptcy eliminates your obligation to the loan, but because the lender still holds the lien on the house, you could actually keep making the payments and stay. In fact, you could even pay it off and own it someday. On the other hand, since you have no contract, you could also move away and let the lender have it back at any point.

Buying a new home

Maybe you are better off letting the house go in the bankruptcy so you can find something more affordable. Buying a new house with a bankruptcy on your credit report can seem like a pipe dream, but it is actually possible. You may be able to get a rent-to-own contract.

Bankruptcy does not have to end your dream of owning a home. A qualified attorney can help you assess your financial circumstances post-bankruptcy and determine which choice offers you the most benefits.

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At the law offices of William H. Oliver, Jr. & Associates in Toms River and Lakewood, New Jersey, we represent clients in Toms River, Neptune, Trenton, Middletown, Red Bank, Wall, Lakewood, Lakehurst, Manchester, Asbury Park, Old Bridge, Jamesburg, Barnegat, Forked River, Manahawkin, Ocean Township, Brick, Manasquan, Howell, Freehold, Hazlet, Bradley Beach, Brown Mills, Long Branch, Keansburg, Marlboro, Bayville, Beachwood, Whiting, Sayreville, South River, East Brunswick, Monmouth County, Ocean County, Middlesex County, Burlington County and Mercer County.