Books on bankruptcy
Can I keep my house through bankruptcy?
An overriding concern for many contemplating bankruptcy is whether they will lose their house in the process. What happens to a house in Chapter 7 is a function of several issues, but, in general,
Equity is exempt
If there is no non exempt equity in your home (value over and above the sum of the unavoidable secured debts on the property + exemption under applicable law + cost of selling the house) the trustee won't attempt to sell the house to pay your creditors.
If there is more than nominal non exempt equity, consider Chapter 13.
Secured debt survives
The bankruptcy discharge eliminates your personal liability for the mortgage, but it does not disturb the lien. Thus, after bankruptcy, the mortgage lender still has its rights in the property, including the right to foreclose if you breach the loan agreement.
But, just filing bankruptcy is not a breach of the agreement in many jurisdictions; failing to make the payments according to the loan agreement is a breach. So, make the payments, keep the house.
Almost without exception, the secured creditor wants you to keep the house and keep paying on the loan. The lender is not looking for an excuse to foreclose.
If you are behind on your payments and it makes sense to keep the house, consider Chapter 13.
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