I just had a question regarding filing bankruptcy. Is it a bad thing if you have unsecured cards as part of your bankruptcy and those cards are, say, with Wells Fargo, and at the same time one’s mortgage is also with Wells Fargo? Is that typically a bad thing? Are they going to try to go after the house or even if the house is exempt are they going to be vindictive and cancel the mortgage? Can they do that?
The short answer is that the status of your credit cards should not effect the status of your mortgage. Even when they are from the same bank, the debt collection on a credit card is a different process than on a mortgage. The biggest difference is that your mortgage is secured by your house, and the bank would have to initiate foreclosure proceedings in order to “cancel” your mortgage. Although specific foreclosure proceedings vary from state to state, they generally require that you are in default on your mortgage. If you are not in default, the bank cannot foreclose on you simply because you are in bankruptcy. If you are in default, the bank may be required to offer you modification options. In this case your poor credit from the bankruptcy or unpaid credit cards may limit your options. However, these would probably not be enough, in and of themselves, to prevent a modification. Bankruptcy can be confusing and stressful, and a bankruptcy attorney can be an excellent resource for sorting out the process.