Encountering financial struggles and filing for bankruptcy can be a source of shame for many people. People often have a lot of questions, especially if they have never gone through a process such as bankruptcy before. Many people fear that someone might take their house or car away, for example, and want to know if they can avoid this if at all possible.
Here are some things to know about bankruptcy and your mortgage in California.
Losing your home
Losing a home is a big source of anxiety and worry for people with financial struggles, and this is very understandable. Fortunately, in California, there is a limit to the amount of home equity that creditors can take if a homeowner files for Chapter 7 or 13 bankruptcy. However, there is still a risk of losing the home if you are behind on mortgage payments or are no longer able to make the payments, just as it would be if you had not filed for bankruptcy.
Potential to obtain a future mortgage
A bankruptcy will likely lower your credit score, thus affecting your chances of getting a mortgage in the near future. However, this scenario does not have to be permanent. With time and patience, you can build your credit score back up to a level where you can get a mortgage and purchase a home again in the future.
By being aware of how bankruptcy affects their mortgage, homeowners can take steps to ensure that they can keep their house while getting back on their feet financially.