Will I lose my house in a Chapter 7 bankruptcy?

homeNot unless you would like to! It is understandable to be concerned about your home when thinking about filing bankruptcy to deal with other debt concerns. As long as you are current on your payments, the mortgage company cannot and will not foreclose.  They will send out a Reaffirmation Agreement (and more than likely offer you a loan modification as well).  The Reaffirmation Agreement is a document where you “sign back up” for your home loan either with the same loan/note details or possibly better if a loan modification is offered.

We also need to check and see if the equity in your home is over the Mississippi exemption or not.  If it is not over, your home is fully protected. If it is over, depending upon how much, there will be options to discuss.For example, your home is worth $100,000. You owe $90,000. Your equity is $10,000.  This easily falls under the Mississippi exemption ($75,000).  But if your home is worth $100,000 and is paid off, then you are over the Mississippi exemption by $25,000 and we would need to discuss options prior to filing your bankruptcy case.  It doesn’t mean that you cannot file, it simply means we have some things to take a stronger look at and discuss first.

Exemptions are protections for your property given to you by Mississippi Law. Exemptions are not the same in every state.  These protections allow you to keep the stuff that you already have, so you don’t have to start all over again with nothing.

Now, if you don’t want to keep your home for whatever reason, filing a chapter 7 bankruptcy will eliminate your responsibility for any deficiency balance that may become due after the mortgage company sells your home.  For example, your home is worth $100,000 but you owe $125,000. You may want to walk away.

One final thought – if you want to keep your home but you are behind on your mortgage payments and cannot bring them current any time soon, you may want to consider filing a Chapter 13 bankruptcy.