Bankruptcy Without Losing Your Home
Do you always lose your home with Chapter 7 bankruptcy?
We have credit card debt of around $25,000. We have still been just barely managing to make all of our minimum payments but it’s getting more and more impossible. We also have a mortgage but always pay it and always on time.
Is it possible to file chapter 7 to wipe out the credit card debt without losing our home? What about our one vehicle we own? If it makes any difference we are a family of five making about $38,000 a year.
RPG=great info. What if we own the vehicle outright? Do we automatically lose it?
No offense people buy I’m looking for info here not internet scams.
No, that is a bankruptcy myth.
If you are current on your payments you can reaffirm your mortgage, meaning you sign a new agreement with your lender to keep making payments and keep the house. Your lender does not have to “agree” to this (meaning, its not like applying for a new loan); if you elect this option, and are current on your payments at the time that you file, the lender must go along.
If you are not current on your payments you are not eligible to reaffirm the mortgage. If you are not current on your payments and want to keep the house, Ch 13 would allow you to catch up on your payments.
If you have more equity in the house already than is allowed in your state (and this varies from one state to the next), then you may need to file Ch 13 in order to keep the house.
There are a few other considerations, but the vast, vast, vast majority of people who file bankruptcy and WANT to keep their home, and are ABLE to make the mortgage payments, do manage to keep their home.
It is rare for a debtor with a good bankruptcy attorney to lose a home they CAN afford involuntarily in bankruptcy. Debtors can OPT to surrender their homes in bankruptcy – and often this is a good time to get out of a bad deal, i.e., if you owe a lot more on the house than what it is worth. They also can “lose” homes that they can’t afford. They also can “lose” homes if they try to file the bankruptcy themselves (or using a non-attorney “paperwork preparation service” that isn’t an attorney and doesn’t know how to make the law work for them).
But if you have a good attorney, CAN afford the house, and WANT to keep it, chances are extremely good that your attorney will be able to structure your bankruptcy to allow that.
Same with vehicles — usually you can manage to keep your vehicle, although if it is worth a lot and you owe very little on it, that can be more problematic. As with the house, you DO have to pay for it if you want to keep it. But with a good attorney, most people can manage to keep their vehicles and homes through either chapter of bankruptcy.
If you own the vehicle outright then the entire value of the vehicle must fit within the exemptions available to you, which vary from state to state. If it does not, a good bankruptcy attorney will be able to review with you what other options are available. Make an appointment in person with a licensed bankruptcy attorney in your state to get the full “scoop.” Most offer one free appointment, or at least a very low cost appointment, to discuss such matters with people who are contemplating bankruptcy. Take advantage of it!
Bankruptcy, Foreclosure, Short Sales
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