Although Chapter 7 bankruptcy gets rid of your personal liability on your mortgage, the lender can still foreclose if you stop paying. Filing for Chapter 7 bankruptcy will wipe out your mortgage loan, but you’ll have to give up the home. So, if you want to keep the house, you must continue paying your mortgage payment.
What happens to your house after you file for bankruptcy?
After filing for Chapter 7, your property will go into a bankruptcy estate held by the Chapter 7 bankruptcy trustee appointed to your case. However, you don’t lose everything because you can remove (exempt) property reasonably necessary to maintain a home and employment.
A Chapter 7 bankruptcy wipes out your financial debt including your mortgage, but you could lose your house. A Chapter 13 bankruptcy is more of a real organization and you can even catch up on payments as long as these are included in your plan.
Can You Keep your home if you file Chapter 7 bankruptcy?
Whether Chapter 7 bankruptcy makes sense when you own a home depends on your goals—do you want to save your house, delay foreclosure, or just walk away with less debt? Most Chapter 7 bankruptcy filers can keep a home if they’re current on their mortgage payments and they don’t have much equity.
What happens if I Surrender my House in Chapter 7 bankruptcy?
Many debtors decide that they can move to a comparable place and pay less. If you are upside down on your house, Chapter 7 provides a simple way to walk away from it. Keep in mind, however, that in some cases, you can eliminate a junior mortgage in Chapter 13 bankruptcy. You don’t want to keep the house.
What happens if you lose your home in bankruptcy?
Losing Your Home in Bankruptcy v. Losing Your Home in Foreclosure You’ll want to be able to distinguish between losing your home in bankruptcy (which happens when the bankruptcy trustee sells your home to pay unsecured creditors) and losing your home outside of bankruptcy (that is, through the foreclosure process). These are two separate processes.
What happens to my home loan when I file Chapter 7?
Specifically, you won’t be responsible for any portion of the home loan when you surrender the house. If the bank foreclosed on the property before you filed Chapter 7 and sold it at auction for less than what you owe, you likely still owe the remaining balance, called a deficiency balance.
