In this Part 3 of the series "Will they take my house if I file bankruptcy?", the situation is that you're behind on your house mortgage payments, afraid they'll foreclose on your house, and probably in debt for other things. In this situation the question is better expressed as "Can I save my house by filing bankruptcy?". As with many questions about bankruptcy, the direct answer is a strong "it depends".
First, filing any type of bankruptcy will stop a pending foreclosure but the question then becomes "For how long?".
In a Chapter 7 bankruptcy, you'd have to pay all of the back (unpaid) mortgage payments quickly or the lender could get the court to allow them to foreclose. If you could pay all the back mortgage payments you wouldn't be in this situation in the first place, so Chapter 7 isn't a solution.
In a Chapter 13 bankruptcy you're allowed to pay the back mortgage payments over the life of a monthly payment plan of three to five years. That makes Chapter 13 bankruptcy the one to look at.
If you can afford to pay off those back mortgage payments monthly as described above, make all your current mortgage payments as they come due, and pay some additional amount monthly into the Chapter 13 payment plan, then you can save your house from foreclosure.
There's one more "helper" available in a Chapter 13 bankruptcy. If your house is not worth more than the amount owed on the first mortgage, then you may be able to remove ("strip") the lien on your house from the second mortgage loan in a Chapter 13, turning that second mortgage debt into an unsecured debt (like credit card debt) that gets paid (possibly only in part) along with other unsecured debts in the Chapter 13 payment plan. That would make one less monthly payment to make to keep your home.
How much would you have to pay each month into the Chapter 13 plan? That's
beyond the scope of this article and depends on your entire financial situation.
This is definitely one of those "don't try this at home" things. You need to
discuss your situation with a qualified bankruptcy attorney in your area.
Will they take my house if I file bankruptcy? (Part 1)
Will they take my house if I file bankruptcy? (Part 2)
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