01 Jun My bankruptcy will rewrite my mortgage, right?
Absolutely not! The Bankruptcy Code has no provision within it that will rewrite or re-negotiate the terms of your mortgage. As a result of the sub-prime loans and all the adjustable rate mortgages, some people hope to jump into the Bankruptcy Court in order to re-negotiate a mortgage. This will not work; however, by reducing your debt in a Chapter 7 and reestablishing your credit or paying 12 months of Chapter 13 payments on time you may be able to refinance at a lower interest rate and have that rate fixed instead of being an adjustable amount. The key is to pay your bills on time from the very moment you file bankruptcy. On time means the contractual due date and not the grace period and keep your debt to income ratio below 36%.
See also Carmen Dellutri’s article Bankruptcy and Credit Reports – The real story.