Options for Keeping Your House in a Bankruptcy Case

Struggling with immense debt can be extremely anxiety-inducing and difficult for individuals and families in the Oak Park area, and debt problems can be especially complicated when you are worried you may be at risk of losing your home. While homeowners had certain mortgage forbearance options in the earlier months of the pandemic, many protections have since expired, and many debtors are struggling to pay their bills while fearing that they could lose their family house.

Are there options for keeping your house in a consumer bankruptcy case? In both Chapter 7 bankruptcy and Chapter 13 bankruptcy, there are options for keeping your home, but Chapter 13 bankruptcy specifically can stop a foreclosure and allow you to get back on track with mortgage payments. Our Oak Park bankruptcy attorneys can say more.

File for Chapter 7 Bankruptcy and Reaffirm Your Mortgage Debt

Chapter 7 bankruptcy is a type of liquidation bankruptcy, which means that the bankruptcy process will involve liquidating the debtor’s non-exempt assets. In Illinois, an individual who files for consumer bankruptcy can exempt up to $15,000 of equity in a home, and if a married couples files jointly for bankruptcy, they can double that amount to $30,000. If you can exempt the equity in your home and you are not behind on your mortgage payments, you may be able to keep your home by exempting the equity and reaffirming your mortgage. When a debtor reaffirms a mortgage, that debtor remains responsible for the debt, and any remaining debt will not be discharged in the bankruptcy case.

While reaffirming debt can allow some debtors to keep their home after a Chapter 7 bankruptcy case, it is important to keep in mind that Chapter 7 bankruptcy cannot stop a foreclosure, and it cannot help a debtor to get caught up on back-owed mortgage payments.

File for Chapter 13 Bankruptcy to Stop a Foreclosure and to Catch Up on Mortgage Payments

With a Chapter 13 bankruptcy filing, you can keep your house regardless of whether you are behind on payments. Under U.S. bankruptcy law, you can also use Chapter 13 bankruptcy to stop a foreclosure and get caught up on payments. Due to the automatic stay that attaches as soon as you file for bankruptcy, the bank cannot move forward with a foreclosure. Then, given the nature of Chapter 13 bankruptcy, you will be able to incorporate your mortgage debt into your repayment plan in order to catch up on your mortgage payment and get back on track with your home loan.

Contact Our Oak Park Consumer Bankruptcy Attorneys

If you are considering the possibility of filing for consumer bankruptcy and are worried about keeping your home, or if you are struggling to make mortgage payments and want to avoid foreclosure, one of our experienced Oak Park bankruptcy lawyers can speak with you today. Our firm can provide you with more information about the different types of consumer bankruptcies, and we can evaluate your circumstances to help you understand your eligibility for Chapter 7 or Chapter 13 bankruptcy. If you decide to move forward with a bankruptcy case, our firm is here to help. Contact the Emerson Law Firm today for more information.


See Related Blog Posts:

Understanding Bankruptcy Chapters for Individuals

When Should a Consumer File for Chapter 11 Bankruptcy?

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