This advice column discusses a situation involving a person with a reverse mortgage who filed for bankruptcy. When they filed for bankruptcy their lender stopped making monthly payments to them because borrowers are usually not allowed to access funds from their reverse mortgages during bankruptcy proceedings. A person might be able to get the bankruptcy court or trustee monitoring the proceedings to approve a request for continued funds through a “reaffirmation agreement.” It is important to be careful with reverse mortgages and to have the assistance of a competent legal professional when going through these types of issues. State bankruptcy laws can vary and different circumstances can become complex so it is a good idea to have guidance from an experienced professional.
See Steve McLinden, Bankruptcy halts reverse mortgage payments, Bankrate, January 22, 2016.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
