Despite the controversy surrounding reverse mortgages, many thousands of homeowners in the US have used them to receive their choice of the following:
- A sizeable lump sum payment representing their accrued home equity
- Monthly payments from the bank (in lieu of the lump sum payout)
- An equity line, ready and waiting
The Reverse Mortgage May Benefit Some Homeowners
Some experts advise against the reverse mortgage, but it is a simple concept that can offer a nice quick payoff, rewarding homeowners in the here and now for all that they have paid in-without any extra taxes or consequence to Social Security benefits. When you take on a reverse mortgage, your monthly mortgage payment disappears and suddenly you can look forward to having the bank pay you instead.
The reverse mortgage does not have to be paid back unless the homeowner dies, moves out, or sells the house. Unexpected events occur however, which can have a substantial effect on personal finances. If you are filing for bankruptcy, the reverse mortgage issue (or impending process) could get tricky-and this is exactly why you should be consulting with an experienced bankruptcy law firm like Levitt & Slafkes, P.C. before making any decisions.
If you have not yet taken on a reverse mortgage but think you might file for bankruptcy in the future, that would also be a good time to speak with your bankruptcy attorney, as you could be putting yourself at even greater risk financially.
Know What Happens to Reverse Mortgage Income in Bankruptcy
If you have a reverse mortgage and are considering bankruptcy, your greatest concern should be protecting the equity in your home as this could be affected during the process. Your monthly payments from the bank could be diminished or stopped altogether also, so before you file, make sure you understand what was agreed upon in the reverse mortgage documents. In some cases, neither the monthly payments or equity line are available after bankruptcy has been declared. Because of this, if you are a homeowner with a reverse mortgage, you should tread carefully before filing-especially if you rely on that income now to help with essentials bills. It is also important that you now have too much equity when you file for bankruptcy. You must get advice from an experienced bankruptcy lawyer to decide if bankruptcy is right for you.
Because Levitt & Slafkes, P.C. has already helped thousands of clients through the bankruptcy process, we understand exactly what you are going through. Our experienced bankruptcy attorneys can offer solutions tailored specifically to your financial circumstances. The initial consultation is offered at no cost, and we are even available to meet with you on weekends and evenings. We are here to help! Call us at 973-323-2953, or contact us online to schedule a free consultation.