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What Happens to Your Home in a Chapter 7 Bankruptcy?

If you own a home and you are considering filing a Chapter 7 bankruptcy, it is important to understand all of your options. Most Chapter 7 debtors keep their house as long as they remain current on their mortgage payments. However, if you are overwhelmed by your mortgage debt and you want to surrender your home, a bankruptcy filing can postpone a foreclosure and buy you some time.

How can an attorney help ensure your keep your home?

An experienced bankruptcy lawyer can help you determine if your home could be at risk by filing a Chapter 7 case. In rare instances, a debtor may have sufficient equity in a house that a trustee could use to pay creditors. However, your lawyer can help ensure that your house is protected during your filing so you can accomplish your financial goals without placing the home in jeopardy. Your attorney can claim the proper to protect the equity you have in your house. Exemptions are created by law to safeguard certain assets owned by the debtor, including your home. Most importantly, if you continue to timely pay your mortgage loan, you will be able to keep your home.

What if you surrender your home?

If you decide to walk away from your home, a bankruptcy filing allows you to eliminate your liability to pay for any deficiency remaining if the house is sold in a foreclosure sale. For example, if your home is worth $200,000 but you owe $250,000 on the mortgage, even if your home is sold for $200,000 at the foreclosure sale, you are still liable to pay the remaining $50,000 due under your mortgage loan. If you file for bankruptcy protection, you can discharge the $50,000 and eliminate your liability to pay it.

If you own a home and you are considering filing a Chapter 7 bankruptcy, let the legal team at Levitt & Slafkes help you obtain the best results possible for your individual circumstances.

If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, PC, at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.

 

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