When filing for Chapter 7 bankruptcy, one of the major concerns for homeowners is whether they will be able to keep paying their mortgage and keep their home. The answer is that it depends on a number of factors, including the type of bankruptcy, the status of the mortgage, and the individual circumstances of the homeowner.
Chapter 7 bankruptcy, also known as a “liquidation” bankruptcy, allows individuals to discharge most of their unsecured debt, such as credit card debt and medical bills. However, it does not discharge secured debt, such as mortgages and car loans. This means that if you want to keep your home, you will still be responsible for paying your mortgage.
It is important to note that filing for Chapter 7 bankruptcy will not automatically mean that you will lose your home. In many cases, homeowners are able to keep their homes by continuing to make mortgage payments. However, if you are behind on your mortgage payments or have a large amount of equity in your home, your lender may choose to foreclose on the property.
One way to protect your home in a Chapter 7 bankruptcy is to reaffirm the debt. This means that you agree to continue making mortgage payments and are personally liable for the debt, even after the bankruptcy is over. However, this is a serious decision and should be discussed with your local Birmingham bankruptcy attorney before proceeding.
Another option to keep your home is called the “Chapter 13” bankruptcy, also known as a “wage earner’s” bankruptcy. This type of bankruptcy allows individuals to keep their assets, such as their home, and pay off their debts over a period of three to five years. Under Chapter 13, you can catch up on missed mortgage payments over the life of the plan. This can help you save your home if you are behind on payments.
It’s important to note that the bankruptcy process can be complex and the laws regarding foreclosures and bankruptcy can vary by state. It’s recommended that you consult with a qualified bankruptcy attorney in Alabaster, or anywhere else in Shelby County, who can advise you on the best course of action for your specific situation.
In conclusion, whether you can keep paying your mortgage and keep your home in a Chapter 7 bankruptcy depends on a variety of factors. While Chapter 7 bankruptcy in Shelby County does not discharge secured debt, such as mortgages, homeowners may be able to keep their homes by continuing to make mortgage payments or by filing for Chapter 13 bankruptcy in Shelby County. It’s important to consult with a qualified attorney to understand your options and make the best decision for your specific situation.
Attorney Steven A. Harris regularly blogs in the areas of family law, bankruptcy, probate, and real estate closings on this website. Mr. Harris tries to provide informative information to the public in easily digestible formats. Hopefully you enjoyed this article and feel free to supply feedback. We appreciate our readers & love to hear from you!