Keeping your House in Bankruptcy
Can I Keep My Home in Bankruptcy?
In most cases of bankruptcy, it is possible to keep your home. However, there are certain stipulations – and differences between keeping your home in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
Keeping Your House in Chapter 13 Bankruptcy
When you file for Chapter 13 Bankruptcy, you are reorganizing your debt to be paid off in a three to five year plan. This includes either all or most of your total debt, including mortgage payments.
It is possible to keep your house when filing for Chapter 13 Bankruptcy and catch up on back mortgage payments. Over the three to five year span of your debt consolidation plan in a Chapter 13 Bankruptcy, you can save your home and avoid foreclosure.
If you have more than one mortgage on your house, although it is not possible to refinance or modify the terms of your first mortgage, you can potentially remove your second mortgage by filing for Chapter 13 Bankruptcy.
Keeping Your Home in Chapter 7 Bankruptcy
Filing for Chapter 7 Bankruptcy can discharge most of – if not all – of your debt. When you file for Chapter 7 Bankruptcy, the bankruptcy trustee has the right to seize your property that is non-exempt from collection and sell it in order to pay off outstanding debt.
However, you do have the option to retain some property when you file for Chapter 7 Bankruptcy. Property that is considered exempt from seizure by bank trustees in Chapter 7 includes:
- Retirement Funds
- Public Benefits
- Household Goods
In order to keep your home in Chapter 7 Bankruptcy, you must reaffirm the debt you owe, i.e. continue to make payments. If you have more than one mortgage on your house, you must reaffirm both in order to keep it.
If you are behind on mortgage payments, you must bring them current before receiving debt discharge in Chapter 7 Bankruptcy, or you may end up losing your home.
Michigan Bankruptcy Attorney
For free bankruptcy lawyer consultation, contact us online or by phone at (734) 397-4540. Contact us today, and our team of Michigan bankruptcy lawyers can help guide you through the process of keeping your house in bankruptcy.