One of the first questions we are often asked is: “Can I keep my house in bankruptcy?” Before answering whether a person CAN keep their house, we ask whether that person SHOULD keep their house. Suppose you have a house in Littleton, Colorado that is worth $225,000, and it has a first mortgage of $300,000 – you are $75,000 under water. You should not be worrying about keeping this house. Instead, you should use the bankruptcy process as an opportunity to get out from under this extremely difficult situation. You can walk away from the house and give it back to the mortgage company, and receive a discharge of the $75,000 “deficiency” (the difference between the amount of the mortgage and what the mortgage company can sell if for). [pullquote align=”right” textalign=”center” width=”40%”]Use the bankruptcy process as an opportunity to get out from under this extremely difficult situation.[/pullquote]
But suppose you have the same house in Littleton and the mortgage is only $175,000. You have $50,000 in equity. In this situation you probably do want to keep the house. The answer to whether you can keep it is: “it depends.” Suppose you file a Chapter 7 bankruptcy. If you are behind in your payments, the mortgage company can obtain relief from the automatic stay and foreclose even though you have filed bankruptcy. Therefore, in order to keep the house in a Chapter 7 case, you must keep current on your payments.
Can I Keep My House in Bankruptcy when Filing Chapter 13?
What about Chapter 13? Here the story is different. Suppose your mortgage payment on your house in Littleton is $1,000 per month and you are four months behind. In a Chapter 13 bankruptcy you can roll this $4,000 deficiency into your Chapter 13 plan and repay it over 60 months. Then, so long as you are current on your monthly mortgage on a “going forward” basis, you can keep your house even though you were several months behind at the beginning of the case.
We hope you we have been able to answer your question: “Can I keep my house in bankruptcy?” It is important to have a loyal ally on your side as you decide the best way to resolve your financial issues and get a new start. Barry Arrington has proven many times that he can successfully overcome the difficulties of filing a Chapter 7 or Chapter 13 Bankruptcy. Contact an experienced bankruptcy lawyer at 303-205-7870 for answers to more specific questions.
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