So many of my clients ask the question can I keep my house if I file bankruptcy. This subject came up again over the weekend over a conversation with some nice people at a coffee shop in Broomfield, CO, just outside of Denver.
I understand many of you reading this might not be homeowners. You might be renting a house, condo or apartment, and your concerns might be about eviction rather than foreclosure. If that’s the case with you, I encourage you to read more about how to avoid evictions here.
For those of you who do own a home, it is possible to keep your house if you file bankruptcy. There’s an art to handling your bankruptcy correctly in order to try to keep your home, and that’s what I want to discuss with you in this post.
A Chapter 7 bankruptcy is often called a “fresh start” bankruptcy. This is because with Chapter 7, nearly all of your debts are completely eliminated.
If you are current on your payments and you file Chapter 7, you will be able to keep your house. This is also the case with a Chapter 13 bankruptcy.
However, I realize that by the time I meet with a client to discuss their bankruptcy options, many of their debt payments are already far behind, including their mortgage payment.
If you are behind in your mortgage payments, a Chapter 13 bankruptcy will allow you to keep your home!
With Chapter 13, we will work out a budget and a monthly debt repayment plan with the court. Your repayment plan will include payments to pay down your back payments on your home, as well as other debts you have.
As long as you keep your Chapter 13 bankruptcy payments current, you will be allowed to keep your home and you will be able to spread out the repayment of the back payments over several years to help ease the repayment burden.
Additionally, with a Chapter 13, you may be able to completely eliminate a second mortgage if you have one.
However, the timing of all of this is crucial. If you wait too long to get started on a Chapter 13 bankruptcy, then the bank may have time to foreclose on your home.
The only way to avoid foreclosure if you are behind in your payments and can’t work out a repayment plan with your bank is to get started on a Chapter 13 bankruptcy filing.
There is hope for you, and the law is on your side. Many of our friends and neighbors all around Denver have used the bankruptcy laws to get a fresh start toward a brighter financial future. I can help you do the same for yourself and your family.