Bankruptcy when you own a house

Many people want to know if they file bankruptcy what will happen to their house.  The treatment of your house in bankruptcy will be different depending  on which type of bankruptcy you end up filing. There are a number of types of bankruptcy.  The type of bankruptcy you file can be tricky decision and any decision on what type of bankruptcy to file should only be made after a consultation with an experienced bankruptcy lawyer.  The following is some general information you should consider and talk about with your attorney in your first consultation.

In a Chapter 7 bankruptcy, people are generally able to keep their houses as long as they are up to date on their mortgage payments. There are debtors that lose their home if they have a sufficient amount of equity in the property that could be used to pay other unsecured creditors. Chapter 7 may be able to buy some time before a foreclosure, if the debtor is planning on giving up the home during the bankruptcy process. It should be noted that there’s a difference between losing a home to bankruptcy and losing a home to foreclosure. These are two different process. If you’re losing your house to bankruptcy that means your trustee is selling it so he can pay other unsecured creditors. If you’re going to lose it due to foreclosure that means you’re behind on your payments and you’ll lose it anyway, just not to your creditors and through the normal process of foreclosure. Many times you can keep your home in a Chapter 7 especially if you have little or no equity.

In a Chapter 13 bankruptcy, in general, you don’t have to give up any property including your home. If you are behind on your monthly mortgage payments Chapter 13 bankruptcy can be a great way to catch up your missed payments over a period of time. There are also other resources that a Chapter 13 case that provides ways for you to possibly reduce your mortgage debt. Chapter 13 bankruptcy is complex and you are encouraged to seek experienced bankruptcy counsel to discuss your particular situation.  As always if you are in Utah we offer a FREE in office consultation so click HERE to schedule an appointment today.

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