There are two factors that must be considered when you want to keep a house when filing a Chapter 7 bankruptcy. The first factor is whether there is equity in the house. When you file a Chapter 7 bankruptcy, the court appoints an individual, called the trustee, whose job is to try to find assets that he can sell to pay something to your unsecured creditors. If you own real estate, the trustee will determine if he thinks there is equity in the property. This means that he wants to see if he could sell your house for more than is owed on it. If the trustee thinks that he could sell the house for more than is owed on the mortgages and for enough to also cover the costs of selling the house, he will market the house. An experienced bankruptcy attorney will normally determine if there appears to be enough equity in the house that could cause the trustee to attempt to sell the property. Many people owe more on their mortgage than their house is worth so it is unlikely that a Chapter 7 trustee will attempt to sell the property.
The second factor that will play into whether you can keep your house after filing a Chapter 7 bankruptcy is the status of your mortgage. If you are behind on the mortgage payments when you file a Chapter 7 bankruptcy, the mortgage company may elect to proceed with foreclosure. In a Chapter 7 bankruptcy, there is no way to prevent a mortgage company from foreclosing if the payments are not current. Your mortgage company may be willing to work with you through either a loan modification or forbearance agreement but that is the mortgage companies choice. You can not force them to work with you after filing a Chapter 7 bankruptcy. If you are behind on your mortgage payments and you want to keep your house, you should consider filing a Chapter 13 bankruptcy.
If you own real estate and are considering filing bankruptcy, you need to consult with an experienced bankruptcy attorney. Contact Hampton Roads Legal Services and we will schedule you a free consultation to discuss how bankruptcy may be able to help you.