Under the terms of a reverse mortgage, the loan must be repaid when the property is no longer the recipient’s primary residence. What happens to the reverse mortgage will depend on whether or not you stay in the house. If you turn the property over to the lender during bankruptcy, they will use it to recover as much of the loan (and any previously existing mortgage debt) as possible. Reverse mortgages are non-recourse loans, which means the lender does not have the right to go after your other assets for repayment other than what was pledged on the loan (in this case, the home).
Before filing for bankruptcy, take stock of how much equity you currently own in your home, as it will have been lowered by the reverse mortgage payments. Under Chapter 7 bankruptcy laws, you can exempt a certain portion of the equity in your home. If the equity in your home is lower than your state’s exemption value, you will be able to stay in the property. However, the reverse mortgage will remain in place, must still be paid off down the line when you do cease living in the property.
Keep in mind that if you do file bankruptcy, you will not be able to access any further reverse mortgage payments during the proceedings. If you are reliant on these payments, this is something to consider seriously before filing.