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Debt Obligation Related Questions

What is debt obligation?

Simply put, debt obligation is also known simply as just debt. Debt is a liability, such as mortgage for a home, or any other type of loan that one must repay. It usually comes in the form of assets given to the debtor by a creditor. If one does not pay back their debt, then financial trouble then comes their way and gives them much difficulty in affording necessities.

If a person is in large debt and has certain non-exempt assets, is filing for bankruptcy an option?

If this person has regular income, then filing for Chapter 13 bankruptcy is an option. However, with non-exempt assets, one would have to file something called a 100% plan. This certain plan would protect certain assets from being sold to cover some of the debt obligation and instead would allow one to make payments throughout a three to five year period. However, even filing for Chapter 13 bankruptcy would not the debt or interest that is owed.

If a person files for Chapter 7 bankruptcy and was discharged from all debt, could the bank foreclose on their house even though the person makes regular mortgage payments?

The reason for filing for bankruptcy is not to erase all debt obligations, but to save a person from having to pay all of the debt that is owed. This would mean that the person would still be connected and be obligated for the debt that is owed, but if the payments on the house are made in a timely manner, and the company is getting their money, then they should have no real reason to evict a person from their home by foreclosing on it. If the company is aware of the filing the person has made for bankruptcy but continues to accept payments for the house, that usually means that they have no intention of foreclosing on the house, and has waived any right they would have had to foreclose in the beginning.

Is it possible for one to file for Chapter 7 bankruptcy to get rid of all credit debt obligations as well as a second mortgage, while reaffirming the first mortgage?

Filing for Chapter 7 bankruptcy would allow one to be discharged from credit debt obligations, and would also discharge the person from both their first and second mortgage. The issue with filing for a Chapter 7 bankruptcy would be that if the person decided to file, both the first and second mortgages have the right to foreclose on the house if they are not reaffirmed. This would mean that even if the person did reaffirm their first mortgage, it would not stop the second mortgage from foreclosing on the house. The only way to file for Chapter 7 bankruptcy without the loss of a house would be to reaffirm both the first and second mortgages.

Is a bank allowed to keep a house from foreclosure and report non-payments to the credit bureau if the owner of the house has filed for Chapter 13 bankruptcy and surrendered the house at the time of filing?

In this particular situation, the person may think that they surrendered their house, but if they did not give the bank, and had the bank accept, the deed to the house for foreclosure, then the person is still the legal owner and has not surrendered the house at all. In this particular bankruptcy case, until the payment plan that has been decided is complete, there have been no changes in the ownership of the property, and the debt obligation that existed before filing for bankruptcy is still the same. If this is the case, the bank then has a right to report the person as a delinquent on the account, because that is exactly what the person is. So yes, the bank is allowed to report the non-payments to the credit bureau until the legal ownership is in their hands and they can foreclose the property.

When it comes to debt obligations, it is important to remember how much money one owes, and who they owe it to. If a person cannot afford to repay debt obligations, they can get themselves into a lot of financial trouble that can cause difficulties in the future when it comes to establishing credit or buying a house, or certain other things that are necessary. Many questions do arise about debt obligation, and when they do come up, it is best to ask the Experts.

Ask a Bankruptcy Lawyer

FiveStarLaw
FiveStarLaw, Attorney
Category: General
Satisfied Customers: 3311
Experience:  Bankruptcy Lawyer. Experienced.
9968427
Type Your Bankruptcy Law Question Here...
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3 Bankruptcy Lawyers are Online Now

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