Can I Keep My Home If I File Bankruptcy?

This Article FAQ On Can I Keep My Home If I File Bankruptcy By Chicago Bankruptcy Attorney Chad Hayward

Can I Keep My Home If I File Bankruptcy? is a very common question Chicago Attorney Chad M. Hayward gets asked very often. Many homeowners think that if you file bankruptcy, you need to vacate your property right away and that sheriff’s deputies will come and through your personal belongings out on the street. There are federal laws and the answer to this common question Can I Keep My Home If I File Bankruptcy? is yes. You can keep your home and decide to exclude your home in your bankruptcy or you can include the debts or mortgage as part of your bankruptcy.

  • This material should be useful to reduce your stress and anxiety so that you understand what is going on when you receive a motion to modify the stay on your mortgage or car.
  • Or, you receive a “Notice of Mortgage Payment Change” through the mail from your home lender.
  • I understand that much of this can be confusing or overwhelming. 
  • A bankruptcy is not the end of the world and you can purchase a home after a bankruptcy.
  • There are certain waiting periods you need to meet to qualify for a mortgage after bankruptcy to qualify for a home loan.

Can I Keep My Home If I File Bankruptcy & Do I Have To Make My Mortgage Payments?

That depends on your intentions on what you want plan on doing with your home:

  • If you plan to keep your real estate, then yes.
  • If you were current with your mortgage payments at the time of filing, then you simply keep making your payments regardless of which chapter you filed.
  • However, if delinquent mortgage payments were the reason for filing bankruptcy, then you likely filed a chapter 13 bankruptcy.
  • After filing chapter 13, your mortgage payments will resume and become due during the following month as though you were current and never missed a payment.
  • All of your previously missed mortgage payments are then put into your plan payment, possible along with some percentage of other debt and vehicles loans.
  • You will then begin making payments to a chapter 13 bankruptcy trustee who will take your monthly payments and disburse them to your creditors, such as your mortgage company, automobile lender, credit card companies, etc.

Can I Keep My Home If I File Bankruptcy: Chapter 7 Bankruptcy?

  • It is perfectly acceptable to file a chapter 7 bankruptcy and keep your house so the answer is yes to the question Can I Keep My Home If I File Bankruptcy
  • Assuming your income does not disqualify you from filing a chapter 7, you need to ensure that you do not have any equity in your home that exceeds your homestead exemption and the cost of potentially selling your house.
  • What does “the cost of selling your house” have to do with anything?
  • The bankruptcy trustee assigned to your case is looking for property that can be sold to pay your creditors.
  • Therefore, if you hypothetically have real estate worth $200,000, the trustee is going to factor in about ten percent of that value towards closing costs such as realtor commissions, tax prorations, title fees, transfer stamps, etc.
  • So, if you have an existing mortgage with a $180,000 balance, then it would not be worth it for the trustee to sell your property, because there would not be any funds left to distribute to your creditors after paying off the mortgage and the closing costs.
  • Furthermore, if you reside in the property, then you can claim a homestead exemption of $15,000 for a single person or $30,000 for a married couple.
  • This means that a bankruptcy trustee would likely not attempt to sell your home worth $200,000 unless you owed under $150,000 on your mortgage.
  • So you could file a Chapter 7 Bankruptcy, continue to make mortgage payments and keep your property while discharging your other debt.
  • Likewise, the same analysis is used to determine how much money you will have to pay to your unsecured creditors in a Chapter 13 bankruptcy petition.
  • Whatever amount of non-exempt equity exists after closing costs is what you will you have to pay to your general unsecured creditors.
  • Under this situation, the bank will generally want you to reaffirm your debt which means that you get to keep your house and make the mortgage payments.
  • Although, if you default on mortgage payments after reaffirming such debt, you could be personally liable for any future deficiency judgments.

Can I Keep My Home If I File Bankruptcy? Yes By Reaffirming Your Debts

You can reaffirm your debts when you file bankruptcy:

  • There are pros and cons to reaffirming debt, whether it is for a mortgage or car loan, so you should make sure to discuss your decision with an attorney before signing a reaffirmation agreement.
  • If you plan to surrender your property, whether through a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, then you would simply stop making mortgage payments and let your creditor go through the foreclosure process to obtain possession of the property.
  • If this your intention, do not be alarmed when you receive a motion to modify the automatic stay or a motion to lift the automatic stay.
  • These are formalities that your lender must go through so that they can obtain possession of the real estate you intend to surrender.

Qualifying For Mortgage After Bankruptcy

The Gustan Cho Team at CrossCountry Mortgage specializes in helping borrowers get qualified for mortgages after bankruptcy, foreclosure, deed in lieu and short sale. Gustan Cho and our licensed and support personnel at The Gustan Cho Team at CrossCountry Mortgage works side by side with Chad Hayward and the attorneys and paralegals of The Law Offices of Chad Hayward in helping families rebuild their life after a bankruptcy and try to get them qualified for a mortgage and help them realize the dream of home ownership become a reality.

Here are the basic qualification requirements in securing a mortgage after a bankruptcy:

  • There is a two year waiting period to qualify for a FHA Loan after a Chapter 7 Bankruptcy discharged date.
  • There is a four year waiting period to qualify for a Conventional Loan after a Chapter 7 Bankruptcy discharge date.
  • Both FHA and VA allows borrowers to qualify for a FHA and VA Loan one year into a Chapter 13 Bankruptcy Repayment Plan with the approval of the Chapter 13 Bankruptcy Trustee.
  • There is no waiting period to qualify for a FHA, VA, USDA Loan after a Chapter 13 Bankruptcy discharged date but needs to be manually underwritten if the Chapter 13 Bankruptcy discharge has not been seasoned for at least 2 years after the Chapter 13 Bankruptcy discharged date which is no big issue.
  • Manual underwrites does require verification of rent, also referred to as VOR.
  • CrossCountry Mortgage Inc. NMLS 3029 is licensed in 50 states and has a national reputation of being able to close loans in 21 days or less.
  • Over 75% of borrowers of The Gustan Cho Team at CrossCountry Mortgage are folks who are going through a major stressful loan process with a different lender and are having a hard time meeting their home closing date or have gotten a last minute loan denial due to incompetence and/or because the loan officer did not properly qualify the borrower.
  • The Gustan Cho Team at CrossCountry Mortgage will close your home loan and closes 100% of all of its pre-approvals.
  • CrossCountry Mortgage has no overlays on government and Conventional Loans.
  • The Gustan Cho Team at CrossCountry Mortgage has NON-QM Loans where there is no waiting period to qualify for a mortgage after a bankruptcy, foreclosure, deed in lieu of foreclosure, and short sale.

If you have any questions on qualifying for a mortgage after a bankruptcy or during a Chapter 13 Bankruptcy Repayment Plan, please contact Gustan Cho of The Gustan Cho Team at CrossCountry Mortgage NMLS 3029 at 262-878-1965 or text Gustan Cho on his cell at 262-716-8151 for faster response. You can also email us at gcho@gustancho.com.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.