Filing Chapter 7 When You Don’t Want to Keep Your Home

Using a Liquidation Proceeding to Terminate Your Mortgage Obligation

Filing Chapter 7 When You Don't Want to Keep Your HomeOften, when you decide that a personal bankruptcy filing is your best option for getting your finances under control and getting a new start, you still want to keep your home. But what if that’s not really in your best interests? What if the costs of keeping your home will be too great? Can you simply file for protection under Chapter 7 and relinquish your home to the bankruptcy court?

As a general rule, the answer is yes. In Chapter 7, you can permanently discharge almost any type of debt in exchange for conveying property to the bankruptcy estate—certain support obligations, tax debts and student loan obligations may be difficult or impossible to discharge. The property that goes into the bankruptcy estate can then be sold to satisfy your creditors. Once you have turned over the property and the debts are discharged, you won’t ever have to make another payment.

It’s important to understand that, when you opt to surrender your home to the bankruptcy court, you surrender all rights with respect to the home, including any equity you have in the home. For purposes of the bankruptcy sale, your mortgage lender will likely be considered to hold a priority interest. That means that, upon the sale of the home, all proceeds will go to the mortgage lender until the mortgage debts is paid off. If there are any additional proceeds, they will be allocated among remaining creditors.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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