Filing for Bankruptcy: Will I Lose My House?
One of the primary concerns of people considering bankruptcy is whether it will affect their home or vehicle ownership. There is a lot misinformation regarding how the process of filing for a Chapter 13 or Chapter 7 bankruptcy affects property ownership.
Would you be surprised to learn that filing a bankruptcy may actually help you to save your property or achieve better payments with your creditor(s)? In addition to the detailed information below, we offer a free consultation to discuss your questions and unique circumstances in more detail. Call us today at 866-261-8282 to schedule a convenient time at any one of our Michigan offices: Detroit, Ann Arbor, Flint, Southfield, Warren or Dearborn.
Chapter 13 Bankruptcy and Home Ownership: Will I Lose My House In Bankruptcy?
A Chapter 13 bankruptcy is a debt consolidation plan designed to help you keep your home, assuming you have income to support making the payments. Filing the Chapter 13 plan will actually legally protect your home from foreclosure as long as the petition is filed with the court before the foreclosure sale occurs.
Other ways that the Chapter 13 program may help you keep your home or improve your payment terms:
- Consolidate and defer other bills to achieve a balanced budget and create money in the budget to pay your mortgage.
- All unsecured debts, such as credit card and medical bills, are deferred and frozen at 0% interest until you are completely current on your mortgage payments.
- In order to create a balanced budget, we can reduce what you are required to pay to your unsecured creditors, to as little as pennies on the dollar. At the completion of the Chapter 13 plan, all remaining unsecured debt balances are legally eliminated with the court discharge.
- The Chapter 13 plan provides 0% interest repayment on mortgage arrears with no continued late penalties or interest charges.
- Opportunity to remove a second mortgage or home equity loan through the Chapter 13 plan if the home value is less than the first or primary mortgage.
- Reduce the principal mortgage owed on a rental property to current market value through a “cram down.”
The purpose of the Chapter 13 program is help you to create a balanced budget with payment priority to your secured debts, such a mortgage or vehicle loan, to help you to keep your home.
Will I Lose My House In Chapter 7?
A Chapter 7 bankruptcy is a debt elimination program to help you shed unsecured debts that you can no long afford to pay. Unless you have excessive equity in your home or are behind on the payments, the Chapter 7 bankruptcy will allow you to keep your home through the bankruptcy process. Often times, filing a Chapter 7 bankruptcy helps you keep your home by eliminating other debts that may have been squeezing your budget.
If you can no longer afford to maintain your mortgage payments even with the other debt being eliminated, you have the option to surrender your home through the Chapter 7 bankruptcy. This will eliminate the mortgage debt although the mortgage company will still have to complete a foreclosure sale to transfer the deed to the property.
Discuss Your Home Ownership Goals
Call us today at 866-261-8282 to discuss your financial goals and get personalized insight on how we can protect your home through the filing of a Chapter 13 debt consolidation plan or a Chapter 7 fresh start.
We offer free consultations over the phone or at any of our six Michigan office locations in Warren, Southfield, Detroit, Flint, Ann Arbor or Dearborn. You will meet with a licensed attorney for a detailed look at your finances and available options for debt resolution.