Can I keep my house if I filed for bankruptcy?
The short answer is – Yes, as long as you are current on your mortgage and are able to keep up with the payments. If the homeowner can afford the mortgage terms but cannot afford to pay off other debts, such as credit cards or medical bills you may be able to keep your house under a Chapter 7 case by filing a Declaration of Homestead which protects the interest in the house you live in up to $500,000 in Massachusetts. What this means is, as long as your home value is below $500,000 & payments current you can keep your home and still file bankruptcy to deal with other debts.
There are several scenarios and conditions that we should consider.
These days there are many who try a last ditch effort to stop a foreclosure by filing bankruptcy. Even if an emergency bankruptcy petition is filed, this only buys you more time before the bank gets around the automatic stay protection of bankruptcy to foreclose on the house unless you are able to refinance your mortgage, able to work things out with the bank and somehow come up with the balance owed. This would be your ideal, best case scenario and everything works out for all parties involved. Unfortunately, this is not as easy as it sounds. You can see my post here about how the foreclosure process works.
If the house does go to foreclosure, then a Chapter 7 bankruptcy discharge will protect the homeowner from having to pay the mortgage deficiency. This is why it is very important to take a look at your credit report as the bank may not immediately go after you for this balance, but wait until your financial situation is more secure and then try to collect the money owed. This scenario is possible if your house went to foreclosure or you had a short sale.
Like always, this does not constitute legal advice. It is just general information. If you think you need help, please contact a bankruptcy attorney in your area to address your specific situation.
