Bankruptcy comes with complexities and implications. If you’re considering filing a Chapter 7 bankruptcy, you may wonder what will happen to your home during and after the process.
It’s essential to know that not all bankruptcies are the same. In the United States, Chapter 7 bankruptcy involves liquidating assets to pay off unsecured debts. However, it might be possible to keep your home if you file this type of bankruptcy.
What determines if you can keep your home?
You can often keep your home if your home equity is less than the allowable exemption and you’re up-to-date on your mortgage, the chances are high that you can keep your home. Remember that you must continue making regular mortgage payments throughout and after bankruptcy. Of course, foreclosure isn’t a consideration if you keep up with the mortgage payments.
What happens if you’re late on the mortgage payments?
Communication with your lender is crucial if you file a Chapter 7 bankruptcy. Keep them informed about your situation and intentions regarding the property. Many lenders prefer to avoid the costly and time-consuming foreclosure process and are willing to work with homeowners to find a solution that benefits both parties.
Bankruptcy can be a lifeline for those drowning in debt, but it’s not without its drawbacks and complexities. If you’re current on your mortgage and wish to keep your home, Chapter 7 bankruptcy may allow you to remain in the home while taking control of your other debts. Discussing your case with someone familiar with these matters may help you learn exactly what’s possible in your case.