What Happens to Your House in a Bankruptcy?

If you are in debt, chances are that you are worried about staying current on your home. If something unexpected happens and you find yourself unable to pay your bills, your greatest concern may be saving your home. Credit cards and small time loans can only go so far to keep your mortgage company happy. If you are behind on your home and have over $5,000 in other types of debt, talking to a bankruptcy attorney in Memphis, TN, may help. 

Filing Chapter 7 Bankruptcy and Your House

When people think of bankruptcy protection, they typically think of a Chapter 7 bankruptcy. Chapter 7 is the type of bankruptcy you file when credit card debt and medical bills pile up to the point that you are unable to pay them anymore. It is not the type of bankruptcy you typically would want to file if you are behind on your house payments. Filing a standard Chapter 7 bankruptcy does not allow a judge to step in and give you more time to save your home. You are in no different position as far as your mortgage company is concerned after filing this type of bankruptcy. They are still allowed to foreclose on your property if you are unable to pay. If you cannot afford your mortgage payments anymore, letting your home go after filing Chapter 7 bankruptcy allows you to be forgiven of any deficiency balance after the bank sells it, but if you want to save your home, filing chapter 7 bankruptcy is not the best option for you. 

Filing Chapter 13 Bankruptcy

When you file a Chapter 13 bankruptcy, you are given a chance to propose a repayment plan to a judge and your creditors. This plan outlines exactly how you will pay your ongoing monthly payments (including mortgage payments) while consolidating some or all of your debt into a payment that you make over a period of time. So if you are $5,000 behind on your home, you can propose a plan by which you will pay $500.00 to your mortgage creditor each month, in addition to your monthly payment for a three year period. This extra payment is possible to make because you typically are only required to make a payment on your secured debt (home or car) but you no longer have to pay on unsecured obligations, such as credit cards or medical bills. Filing Chapter 13 is a great option for someone who makes average amounts of money. If you make more money than average, the payment may be higher than it would be otherwise. In some cases you simply cannot afford to keep vehicles and other extra items, but you can almost always keep your home. 

Other Options

A bankruptcy Attorney in Memphis, TN, can also talk to you about other options outside of a bankruptcy situation. If you are behind on your home, you may have a second mortgage. An attorney can help you settle this obligation or even remove it entirely. This can help lower than amount of money you pay each month. Attorneys can also assist you with asking the mortgage creditor whether they are willing to refinance your home loan (and thereby lower your monthly payment). Finally, the bank may be willing to allow you to modify your loan so that the amount you are currently behind is paid back at a later date. This type of modification is often available even if you owe quite a bit of money on the home. These options allow you to save your home without going through the process of filing a bankruptcy. Talk to an attorney to find out which option is best for you. 

 

Source : articlesbase.com