A complex relationship exists between bankruptcy and home ownership. Individuals can maintain ownership of home while going through bankruptcy. While it’s definitely the emotional decision many want to make — to hang onto homes — it’s not always the best legal or financial decision.
When facing bankruptcy, the goal is to walk away with a cleaned slate that lets you better manage your finances in the future. If you work to keep your home during bankruptcy but you still can’t pay the mortgage payment, then you aren’t really setting yourself up for future financial success and you might end up losing your home anyway.
When deciding whether to keep your home during bankruptcy, then you should understand exactly how the bankruptcy will impact your finances. Will the relief from other debts let you concentrate on the mortgage?
If you decide that you won’t keep your home as you go through bankruptcy, then it’s important to file and manage the bankruptcy in such a way that you are protected from further collections with regard to your home. In many cases, the bank will take the home and sell it for what they can get on the market. With housing market ups and downs so common today, homes often end up in short sale processes. That means the bank sells the home for less than is owed on it; you don’t want to be stuck owing the difference on the home while you are getting back on your feet.
Understanding the relationship between mortgages and bankruptcy can help you make the right decision about home ownership as you go through a debt relief process. Our office helps you from the beginning so you make educated decisions that are right for you and your family.