Libertyville Bankruptcy Attorney Describes What Happens To Real Estate When Filing

Libertyville bankruptcy attorney states that you as a debtor have a unique situation when it comes to houses in Chapter 7.  You have the ability to surrender the house and get out of the debt completely or you can continue to keep the house and repay the debt by making voluntary payments over the life of the loan.  

There are some creditors that want you to reaffirm the debt on your mortgage; however, I never recommend this.  Under the United States Bankruptcy Code, you are not required to reaffirm a debt on a house.  You have the right to simply make current mortgage payments to keep the property.  Now, your mortgage company might not report that to the credit bureaus as being current and they might not send you monthly statements and they might not make it easy for you to pay such as at branch offices at the banks.  However, you have every legal right to continue to make monthly payments towards that debt and you can keep your house.

 The great thing about not reaffirming the debt is that any time after you file the bankruptcy, if you feel that you can no longer make the house payment and you no longer wish to be strapped with that debt, you have the ability at that point to stop making the payments and the debt has already been illuminated.  Your lender must go through the complete foreclosure process to remove your name from the title and put their name on the title.  Thus, you can live there approximately one year in the state of Illinois without making a payment before you would lose the property to foreclosure. 

The choice is up to you in a Chapter 7; you can either keep the house and continue to pay for it or you can stop making payments and eventually surrender the property back to the lender.

 

 

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