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Can I keep my house if I file for Bankruptcy?

Posted on Feb 10, 2009 in Bankruptcy, Chapter 13, Chapter 7, Foreclosure - Saving Your Home

Clients ask “can I keep my house if I file for bankruptcy” more frequently than any other question.  The answer depends on many factors.

  • If we reduce your debt, can you continue to make your mortgage payments?
  • Are you presently current with your mortgage?  Otherwise, we must file a chapter 13 case to allow you to catch up.
  • Does it make sense to keep your house if the amount of debt against the house greatly exceeds the value of the house.

So the answer is, “Yes, you can often keep your house – but not always.  And it doesn’t always make sense for you to do so.”

Things could change under a bill now being considered in Congress.  Under the “Helping Families Save their Home” Act, HR 200, people with mortgages greater than the value of their home, facing foreclosure, will be able to modify their loans in chapter 13 cases.  There are more than a few conditions.  So called “cram-downs” of mortgages in chapter 13 might face resistance from lenders and might turn out to be pretty expensive.  But it might be a lot better than the alternative of losing your home altogether.

When thinking about bankruptcy, particularly in these changing times, look for legal counsel from people at the front-lines of the bankruptcy practice.  Like the people from Lakelaw.

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