If my mortgage company goes bankrupt, what will I owe?

Q: I have a conventional home mortgage. In fact, I was just about to pay down about $13,000 of it with cash. I probably owe $120,000. I could pay it all off if I wanted to.

I see that my mortgage company may sell its assets for "pennies on the dollar".

Should I make my pay down at this time? Is there any way I can buy my own mortgage back for anything less than the full amount actually due? Who would I call? Does the bankruptcy impact me and my debt at all?

A: No, the bankruptcy won't impact your debt; you'll still have to pay it off in full. But I'd advise against adding anything to your payment right now, while the process of transitioning to a new servicing company is taking place. It might be that the bankruptcy trustee will keep their servicing business going. But more likely, someone will purchase that business, and send you a new address and coupon book in the coming months. Once you get established with a new servicing company, then you can pay down the debt. By the way, make sure there is no penalty for prepayment when you do so, and be sure it is clearly marked to pay down principal.

Terry Savage is a registered investment advisor and the author of the newly published The Savage Number: How Much Money Do You Need To Retire? (256 pages, Wiley, $24.95).