Foreclosure Sign in Front of House                 What Happens If I Surrender My House In Bankruptcy?

If you file a chapter 7 bankruptcy or a chapter 13 bankruptcy, usually you have two        choices regarding your home. If you are not behind on your house payments you can file a chapter 7 bankruptcy and either keep your home and keep making your regular house payments on the home, or you can surrender or give back the home to the mortgage company and not owe any debt on the mortgage. If you are behind on your house payments, you can file a chapter 13 bankruptcy which will usually allow you to get caught up on your house payments, save the house from foreclosure, and pay back the amount you are behind on your house payments in the chapter 13 plan. The bankruptcy court will allow you to pay back the amount you are behind on your house payments over a 3 to 5 year monthly repayment plan.  If you do not want to keep the house, you will surrender the house in the bankruptcy. You will wipe out the debt you owe on the house, but you must give the house back to the mortgage company. If you decide to surrender the house in the bankruptcy, you are usually allowed several months to move out the house after you file the bankruptcy. So you do not have to move out immediately after filing the bankruptcy. Most of our clients have several months to move out of the house after they surrender the house in the bankruptcy. If you file a chapter 7 bankruptcy, you will not owe any money on the home if you surrender it in the bankruptcy. If you file a chapter 13 bankruptcy, you may owe a very small percentage of the deficiency balance on the home once it is sold by the mortgage company. This amount is usually only pennies on the dollar of the debt owed on the deficiency balance.