Can Filing for Bankruptcy Help Me Save My House?

The risk of losing one’s home may be the scariest part of severe debt, especially if you have fallen behind on your mortgage payments and foreclosure has been threatened. Indeed, if you lose your home, you will not only lose the money that you’ve put into it and the comfort that your home provides, but you may also be too financially destitute to secure other housing.

At Whitten & Whitten, we understand how terrifying losing a home can be. Here are some options for potentially keeping your home when you are unable to make your mortgage payments, including the option of filing for bankruptcy.

Filing for Bankruptcy

Depending upon your financial circumstances and the type of bankruptcy you file for, filing for bankruptcy may help you to save your house, as well as other property that you own. In fact, if you opt to file for Chapter 13 bankruptcy, you will repay a portion of your debts, including your mortgage loan, over the course of a payment plan. In exchange for paying back a part of your debt, you get to keep certain assets. Unfortunately, if you file for Chapter 7 bankruptcy, you are agreeing to allow your property to be liquidated so that creditors can be paid in exchange for a discharge of your debts. While some of the equity in your home may be exempt, your home itself is not. Keep in mind that filing for bankruptcy will also initiate the automatic stay, which will, at the very least, give you some time to relax and figure out your options.

Modifying Your Loan

Another option for avoiding foreclosure and actually keeping your home is to modify your loan. If you can modify or refinance for lower payments, you may be able to make your payments and keep your house. Some options for doing this, as explained by the U.S. Department of Housing and Urban Development, include:

• Home Affordable Modification Program (HAMP);
• Principal Reduction Alternative (PRA);
• Second Lien Modification Program (2MP); and
• Home Affordable Refinance Program (HARP).

There are also options available for those who are having difficulty making their mortgage payments because they are unemployed and do not have a source of income as such. These options include: the Home Affordable Unemployment Program, Emergency Homeowners’ Loan Program, and FHA Special Forbearance.

Meeting with a Professional to Discuss Your Options in More Details

If you want to learn more about potential options for saving your home and whether or not filing for bankruptcy can result in you keeping your home, we recommend that you speak with a professional. At Whitten & Whitten, our bankruptcy lawyer is ready to meet with you today. Contact us now for an initial consultation.