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Category: Bankruptcy Law
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do you have to be current on your mortgage in order to file

Customer Question

do you have to be current on your mortgage in order to file chapter 7 bankruptcy?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  insearchoftheanswer replied 5 years ago.

Good afternoon. No...there is no requirement to be current. In fact, the reason most people file Ch. 7 is because they are not current on either their mortgage or their other bills.



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Category: Bankruptcy Law
Satisfied Customers: 53705
insearchoftheanswer and 3 other Bankruptcy Law Specialists are ready to help you
Customer: replied 5 years ago.
I'm filing charter 7 on a business, does that make any difference. an attorney in madison, wis. told me I had to be current on my mortgage first in order to file chapter 7, otherwise it would have to be considered chapter 13. ? I'm confused now.
Expert:  insearchoftheanswer replied 5 years ago.
I will opt out and let a Wisconsin lawyer help you.
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
1) What business form is this (corporation, sole proprietorship, etc.)?
2) Is it your intention to close the business or to keep it open?
Customer: replied 5 years ago.
Thank you for taking the time to help me. It's a hair salon.
Expert:  cfortunato replied 5 years ago.

I need more information to answer your question. Please answer all of the questions:

1) Is the hair salon a corporation?

2) Is the mortgage in the business name only, or also in your name personally?

3) What is the mortgage for?

4) Do you want to close the hair salon?

Customer: replied 5 years ago.

1) sole proprietor (2 months late on the rent payments to landlord)


2) have 2 loans on the business secured by my home. (in my name)


3) my home (which is 3 months behind and facing foreclosure.)


4) no

Expert:  cfortunato replied 5 years ago.

Since your business is a sole proprietorship, you cannot file a business Bankruptcy. If you want to eliminate the business's debts, you would have to file a personal Bankruptcy, and include the business debts in it. This is because debts of a sole proprietorship are considered to be the debts of the individual who owns the sole proprietorship.

In other words, you cannot be relieved of the responsibility to pay the debts of the business unless you file a personal Bankruptcy.

In any event, you absolutely do not have to be current on your mortgage to file a Chapter 7 Bankruptcy, as there is no such requirement anywhere in the Bankruptcy Code.


I think this is what you wanted to know. If not, please let me know.

Thank you!

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