What happens to a reverse mortgage after bankruptcy?
What happens to a reverse mortgage after bankruptcy? Tim Cella used to work at several law firms Just now Based on my experience in the field, if a person has taken out a reverse mortgage and then files for bankruptcy, the process of what happens to the reverse mortgage will depend on a few factors. The type of bankruptcy that is filed, such as Chapter 7 or 13, will determine how the reverse mortgage will be treated. If a person files for Chapter 7 bankruptcy, which is a type of bankruptcy that liquidates a person’s assets to pay creditors, the reverse mortgage will be treated as an unsecured debt. Unsecured debts are considered to be the lowest priority in bankruptcy proceedings, so it is likely that the reverse mortgage will not be paid as part of the bankruptcy process. However, if a person files for Chapter 13 bankruptcy, which is a type of bankruptcy where the person is allowed to keep their assets and set up a repayment plan for their creditors, the reverse mortgage may be ...