Livonia Michigan Bankruptcy - Michigan Bankruptcy Blog

Livonia Michigan Bankruptcy

Michigan Bankruptcy Blog

Keeping a House in Chapter 13 Bankruptcy

Posted by Peter Behrmann, Esq. On January 22nd

Keeping a House in Chapter 13 BankruptcyLivonia Home Chapter 13

 

So you want to keep your home and file Chapter 13 bankruptcy.  In a Chapter 13 Bankruptcy, the debt that you owe to the mortgage company will not be discharged.  However, we may be able to remove a second mortgage or home equity line of credit from your home.

 

So here is what happens:

(A) You owe $150,000 on your first mortgage;

(B) Your home is currently worth $120,000;

(C) You owe $37,500 on your second mortgage;

(D) There is no equity in your home to attach to the second mortgage and the second mortgage is removed in your Chapter 13 Bankruptcy.

 

How this is different than Chapter 7 and keeping your home!

 

In a Chapter 7, Bankruptcy the underlining debt to both your first and second mortgage is discharged; however, the liens (both of them) remain on your home.  In short, you are not responsible for the payments anymore; however, they can still foreclose and take the property back.

 

A Chapter 13 Bankruptcy makes the most sense if you plan on retaining your home long term.   In a Chapter 13 Bankruptcy, the note will not be discharged on your first mortgage; however if you plan on keeping your home this should not be an issue.  In a Chapter 13 Bankruptcy, both the Note and the Lien can be removed from your home for any second mortgages or home equity lines of credit are that no equity attaches too.

 

The bottom line: If you want to keep the property long term and you have a second, third or even a fourth mortgage, a Chapter 13 might just be the best decision for you.

 

Peter Behrmann is a Livonia Bankruptcy Attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.

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