Bankruptcy does not allow you to keep your home AND not pay for it!
By Pamela Stewart, Attorney at Law on Apr 5, 2009 in Bankruptcy Myths, Discharge of Debt
Recently I have had a number of clients coming in who are under the impression that they can file bankruptcy and keep their home – without paying for it. I don’t know where they are getting this advice – but it is wrong.
If you can no longer afford to make the payments on your home – filing for bankruptcy will not save your home. The mortgage company has a security interest in your home; if you don’t pay for it, they get to foreclose to get the security interest (your home) back and to sale it to someone else. A Chapter 7 bankruptcy will discharge (extinguish) any liability you owe to the mortgage company but if you want to keep your home – you must continue making payments.
If you get behind in your payments and can afford to make your regularly scheduled mortgage payment and a little more to catch up the payments you are behind – you may want to consider Chapter 13. If you can’t make the regular payments, you may want to contact your mortgage company for a forbearance agreement or loan modification until your situation changes.
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