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Should you reaffirm your mortgage after bankruptcy?

If you can prove that you have the ability to pay your house payments, your mortgage holder may agree to a reaffirmation of your loan. SFGate explains that signing this document holds you to the original terms of the mortgage and allows you to keep your home.

Having the option does not necessarily mean that it is a good idea, though. Consider these factors first.

What is your post-bankruptcy budget like?

Financial experts agree that your payments should equal less than one-third of your monthly income for a healthy budget ratio. Even though the court will discharge much of your debt, you may still have child support, spousal support and student loan payments that will take a bite out of your living expenses. You do not want to put yourself in a bind so that you will have to go without things you need or else default on your loan.

Can you afford to keep your property in good condition?

Homeowners have maintenance and repair costs that may crop up at inconvenient times. If you are unable to save for these, and you do not have a credit card to fall back on, you may find yourself in a dour situation such as a blocked drain or a dysfunctional heater with no means of paying the repair costs.

Why do you want to keep your home?

Evaluate whether your attachment to your home is practical or emotional. Bankruptcy is giving you a fresh start. If reaffirming your current mortgage has the potential to cause you financial hardship down the line, including your mortgage in your bankruptcy may be the right decision.

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