If you owe more on your home than it’s worth, you’re said to have no equity -; and the home cannot be lost through Chapter 7. Your home is safe because a bankruptcy trustee has no reason to sell property that will not be able to satisfy your debts. Here, you will learn how a Lawyer in Topeka KS can help you keep your no-equity home during a Chapter 7 case.
Lenders Keep Liens During Chapter 7 Cases
Depending on the type of debt involved, your creditors are treated differently during Chapter 7. Lenders are considered ‘secured’ creditors, while credit card issuers are unsecured. The reason why is because the mortgage lender has a note that requires you to repay the loan, and they hold an interest (lien) in your home. If you don’t make mortgage payments, you’ll go into default and/or foreclosure.
When your debts are discharged in Chapter 7, your obligation to repay the loan is eliminated, but the lender’s lien remains. Following a discharge, a mortgage lender can foreclose if you stop making monthly payments. Because the lien is not removed, it has an effect on the amount unsecured creditors receive after a sale.
A Home Without Equity Can’t Benefit a Bankruptcy Estate
In Chapter 7, the bankruptcy trustee’s duty is to get the largest possible recovery for unsecured creditors. However, if a trustee decides to sell your home, they will have to pay the mortgage lien before disbursing money to creditors. If there’s no equity in the home, there would be nothing left with which to satisfy creditors after the mortgage lien is paid. In this case, the trustee will abandon the home, and you’ll be able to keep it. Remember, though, that you’ll still have to pay your mortgage to avoid foreclosure.
There are a lot of things to consider during bankruptcy -; you may be worried that you’ll be left without a home, vehicle or any of your personal property. With solid legal representation, you can come out of bankruptcy with enough assets to continue enjoying a comfortable life. For help in keeping your home through a Chapter 7 filing, visit Joewlaw.com to consult a bankruptcy Lawyer in Topeka KS today.
