How Chapter 7 Really Works When Surrendering Your Home

Giving Up Your Home in a Chapter 7 Bankruptcy Filing

If you are struggling to make your house payments, you might be able to file for Chapter 7, discharge some of your debts and keep your home. In the long term, though, that might not be in your best interests. The most effective way for you to get a fresh financial start may be to simply surrender your home as part of your bankruptcy filing. How do you do that and what are the consequences?

Surrendering your home in bankruptcy may make sense, but requires care and planning

When you took out a mortgage loan, you signed two papers. One was the Note, or “IOU” in which you promised to repay the loan. The second was a mortgage, in which you gave the lender your home as collateral. In a bankruptcy, your discharge eliminates your personal liability under the Note. However, the mortgage lien remains in place.

For many people, a home or other real estate is simply too expensive for them to keep. In these situations, a decision to let the real estate go to foreclosure may be the proper path to long term financial stability. However, many people just move out, and that can create many other problems. In other words, there is a right and a wrong way to “surrender” a home. Moving out too early can create other problems, including an inability to keep insurance in place to protect you from liability damage claims if someone or their property is injured or damaged. A vacant property is prone to vandalism. If there is a homeowners association or condo association in place, those fees need to be paid until the property is no longer in your name. Moving out too soon can actually make matters worse!

This is an area where individualized advice from an experienced attorney is essential. There are several useful articles and blog posts on our website. Check them out!

Contact Neuner & Ventura, LLP

Let us help you take back control of your life! We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every new potential bankruptcy client. (We do, however, reserve the right to charge a fee to review any work done by another attorney). For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request

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