September 12, 2019 By:
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.
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.