Your Home and Bankruptcy
If you are current on your mortgage payments, you are able to make the mortgage payments moving forward, and the amount of the equity in your home is within the limits of the amount you can protect in bankruptcy, the filing of a Chapter 7 bankruptcy will not cause you to lose your home. See my article entitled, “Will I Lose My Property and My Possessions If I File for Bankruptcy – Part 1. See also my article entitled, “The Difference Between Chapter 7 and Chapter 13, and Which One is Right For You.”
If you are behind on your mortgage payments, a Chapter 13 bankruptcy would allow you to catch up on the mortgage payments over a three to five year period. See my article entitled, “Save Your Home By Filing For Bankruptcy.”
Sometimes a person is behind on their mortgage payments, has the ability to make the mortgage payments moving forward, but does not make enough money to be able to put together a Chapter 13 repayment plan to pay what they are behind on the mortgage. A technique which is available in that case is to combine a Chapter 7 bankruptcy with the Michigan Step Forward program. The Michigan Step Forward program will pay off what you are behind on the mortgage, and the Chapter 7 bankruptcy will eliminate many of your other debts. See my article entitled, “Catch Up On Your Mortgage Payments Using the Step Forward Michigan Program.”
There is a document you can sign in bankruptcy called a reaffirmation agreement. You do not need to “reaffirm” the mortgage in order to keep paying it and remain in your home, but signing it would help you improve your credit score faster post-bankruptcy. See my article entitled, “Reaffirmation Agreements and Lease Assumptions.”
The above information is a general overview and is not intended to be used as legal advice. If you are considering filing for bankruptcy, the best thing to do is call our office at 248-557-3645 and schedule a free consultation so you can receive advice which is tailored to your specific circumstances.
By: Michael Benkstein, Esq.
Managing Attorney, Bankruptcy Department
The Law Offices of Joumana Kayrouz, PLLC
1000 Town Center
Southfield, MI 48075