April 7, 2021 By:
The CARES Act gives bankruptcy judges temporary authority to discharge mortgage obligations if the mortgagor (person owing the debt) defaulted on three or fewer residential mortgage payments between March 2020 and December 27, 2021. There is a caveat, however. To obtain the discharge, the debtor must provide evidence that a COVID-19 hardship directly or indirectly led to the default. The statute does not indicate what constitutes sufficient proof, but legal experts expect the standard to be highly flexible, given the nature and persistence of the pandemic.
Homeowners in Chapter 13 must understand, though, that any discharge granted by the bankruptcy court will have a limited effect. While it will permanently relieve the homeowner of the obligation to make the missed mortgage payments, it won’t have any impact on post-discharge state law remedies available to banks and mortgage companies. For example, it won’t suspend foreclosure proceedings, and it won’t have any impact on liens against the property. It will, however, allow you to walk away from a mortgage without any further obligation.
At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. I am currently communicating with clients by phone, text message, or videoconference. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.