Will I lose my house if I file for bankruptcy?
Will I lose my house if I file for bankruptcy?
A major concern for many debtors contemplating bankruptcy is whether or not they will lose their home in the process. Luckily, bankruptcy may not result in this devastating consequence. There are factors involved in the foreclosure process. If the equity (value over the sum of secured debts, cost of selling the house) in the house is exempt and you continue to make payments on the house, the trustee will not attempt to sell it to pay creditors.
Even though you may be able to keep your house, you must realize that bankruptcy does not disturb the lien, which is the personal property interest that secures a debt. You must still make mortgage payments. In essence, the lender is "abandoning" the house to you, allowing you to keep your house on the condition that you maintain mortgage payments. Thus, even after filing for bankruptcy, the mortgage lender still has rights in the property; this includes the right to foreclose if you stop making payments.
Foreclosure is not beneficial for anyone involved. For this reason, a secured creditor wants you to keep the house and keep paying the loan. They are not looking for an excuse to foreclose; this is considered the last option when a debtor fails to make payments. If you are behind in your payments and you want to keep your house, consider filing for Chapter 13 bankruptcy as opposed to the more popular, Chapter 7. Lenders make money when a loan is paid on time, not when they are obtaining property. Generally, no lender deliberately wants to obtain your property. As long as you make payments on time, you can remain in your home. Establishing trust and reliability is a key factor in keeping your home and rebuilding your credit.
This article has been provided by Raleigh bankruptcy lawyers Howard, Stallings, From & Hutson, P.A., 919-821-7700, www.hsfh.com.
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