Default on Mortgage

[laurannm]

Does filing BK automatically put you in default on your mortgage, or does just being behind on payments?

I'm not seeing any mention of Bankruptcy on my note, but I am still looking through the rest of my original loan paperwork

And what exactly does Non-judicial foreclosure mean, and does that apply to bankruptcy at all (or reaffirmation agreements)?

Thanks

[JRScott]

Nonjudicial foreclosure is allowed in some jurisdictions. In a non judicial foreclosure the lender does not have to go to court to start foreclosure proceedings. You would need to ask a local bankruptcy lawyer if your area permits this type of foreclosure.

Being behind on payments will put you in default, you will need to have all payments caught up by the time you file bankruptcy if you intend to keep the house in a chapter 7 (in a chapter 13 you can roll the missed payments into the plan I think still).

You should schedule some visits with local bankruptcy lawyers to get a feel for the state laws affecting your situation

[HHM]

Is your real question that, if you file BK, will that, by itself, trigger a foreclosure?

Generally, the answer is no. Read through this thread as it probably addresses some of your questions.

http://www.bkforum.com/showthread.php?t=22616

[laurannm]

Thanks to you both. I know in this state nonjudicial foreclosures are allowed if you are in default. I guess the question is what exactly puts you in default on a mortgage. Is it just missing payments, or would filing alone put youin default? Like for example I know on some auto lease contracts, filing BK automatically puts you in default.

I am current on everything and plan to be when we file, so I am guessing we will be fine

[HHM]

Strictly speaking, any breach of the loan agreement puts in default. So, for example, the loan agreement says you are to maintain insurance on the property, and you do not, you are in default.

Regarding "BK Default" clauses. These clauses appear in many types of contracts, but are rarely ever used as the sole basis to enforce the lien (i.e. foreclose/repo) because many courts find that BK default clauses are against public policy and therefore unenforceable.