Can You File for Bankruptcy in Pennsylvania with a Reverse Mortgage?
If you have a reverse mortgage and are struggling with debt, you may have considered filing for bankruptcy in Pennsylvania. But are you able to do that while also having a reverse mortgage?
In many situations, filing for bankruptcy with a reverse mortgage in Pennsylvania is possible. Still, it can also be risky when you do not have our experienced attorneys by your side. While you are under bankruptcy, reverse mortgage payments will likely stop, so it is important that debtors have sufficient savings to get them through. Depending on the amount of your reverse mortgage payments, you may be eligible to file for Chapter 7 or Chapter 13 bankruptcy in Pennsylvania. If Chapter 7 is your only option, it is important to ensure that your home will be protected from liquidation.
Our attorneys are here to help debtors with reverse mortgages successfully file for bankruptcy with little risk. For a free case evaluation with the Pennsylvania bankruptcy lawyers at Young, Marr, Mallis & Associates, call today at (215) 701-6519.
Can I File for Bankruptcy in Pennsylvania if I Have a Reverse Mortgage?
A reverse mortgage is a financial agreement between a borrower and a lender. Generally, seniors who own their homes are often the ones that opt for a reverse mortgage, which allows them to sell equity in their homes to a lender to receive payments. If you currently have a reverse mortgage on your home and are having difficulty handling other expenses, you may have considered filing for bankruptcy. But can you do that in Pennsylvania?
In many cases, people with reverse mortgages can file for bankruptcy in Pennsylvania if they meet the eligibility requirements and need debt relief. However, there may be caveats depending on the type of reverse mortgage you have and the amount of your payments, so reach out to our Pennsylvania bankruptcy lawyers to learn what bankruptcy might look like for you.
Reverse mortgages are complicated financial agreements that can be difficult to understand. Filing for bankruptcy with a reverse mortgage can be risky, especially if you enter bankruptcy without help. With our experienced attorneys by your side, you can successfully file for bankruptcy and exit it debt-free without unnecessarily impacting your reverse mortgage in Pennsylvania.
Will My Reverse Mortgage Payments Stop When I File for Bankruptcy in Pennsylvania?
If you file for bankruptcy with a reverse mortgage in Pennsylvania, it is important to save up. Depending on the type of bankruptcy you choose to file for, the process may be longer. Reverse mortgage payments generally stop during bankruptcy. So, if those payments are your main source of income, it is crucial to prepare.
Once you file for bankruptcy in Pennsylvania, your reverse mortgage payments will likely cease for the duration of a bankruptcy. They’ll pick back up again when you exit bankruptcy, but that doesn’t help you for the period of time you are under bankruptcy in Pennsylvania. Because of this, it is important for debtors to have sufficient income from other sources or savings, especially if they choose to file for liquidation bankruptcy.
The same goes for debtors who file for Chapter 13 bankruptcy with a reverse mortgage in Pennsylvania. Chapter 13 bankruptcy allows debtors to pay back creditors via a repayment plan. Generally, these repayment plans last for several years. If you are not receiving reverse mortgage payments for that period, and those payments are your main income source, you may have difficulty meeting scheduled payments and handling other expenses. Our Philadelphia bankruptcy lawyers can help you prepare for the temporary cessation of reverse mortgage payments so you can more easily handle your debt.
Can the Amount of My Reverse Mortgage Payments Impact My Eligibility to File a for Bankruptcy in Pennsylvania?
For Chapter 7 and Chapter 13 bankruptcy, debtors must pass a means test of sorts. Depending on the amount of your reverse mortgage payments, you may only be able to file for one type of bankruptcy in Pennsylvania, limiting your options.
The type of bankruptcy you can file for depends on your income. Generally, those with insufficient income to pay back creditors are eligible to file for Chapter 7 bankruptcy in Pennsylvania, which involves liquidating certain assets.
Eligibility for Chapter 13 bankruptcy is also based on income. You can opt for a repayment plan if you have a high income to support it. This process takes longer but doesn’t require liquidating some of your assets.
Because most people with a reverse mortgage are retired and do not have many streams of income, they may only qualify for Chapter 7 bankruptcy. However, if your reverse mortgage payments are substantial, causing you to pass the means test for Chapter 13 bankruptcy, a repayment plan may be your only option.
Might I Lose My Home if I File for Bankruptcy in Pennsylvania with a Reverse Mortgage?
When you get a reverse mortgage, you relinquish equity in your home in exchange for regular payments. Because Chapter 7 is a liquidation bankruptcy, you might be concerned that you may lose your home if you file for bankruptcy with a reverse mortgage in Pennsylvania.
Filing for bankruptcy with a reverse mortgage can be complicated. Depending on the amount of equity in your home you sold and how much you still retain, your home may be exempt from Chapter 7 liquidation. Unfortunately, some reverse mortgages might have a caveat that enables a lender to take a debtor’s home when they file for bankruptcy in Pennsylvania.
Because reverse mortgage agreements may be complex, debtors might not know whether or not their home is at risk when they file for bankruptcy until it is too late. Our Bucks County bankruptcy lawyers can review your reverse mortgage agreement to evaluate the risk of filing for bankruptcy so that you do not jeopardize your home.
Ask Our Lawyers About Filing for Bankruptcy with a Reverse Mortgage in Pennsylvania
If you need to file for bankruptcy and have a reverse mortgage in Pennsylvania, our attorneys can help. For a free case evaluation with the West Chester bankruptcy lawyers at Young, Marr, Mallis & Associates, call today at (215) 701-6519.