Daily Archives: May 12, 2011

The House Payment In Bankruptcy Story

What can I keep paying for if I file bankruptcy?

What bills do I have to stop paying if I file bankruptcy?

These are common questions I get from people.

Too much to cover in one post, so more later.

First, let’s discuss mortgage payments.

In chapter 7, if you want to keep your house, keep making the mortgage payments and insurance and taxes.

The first questions I ask anyone, do you have or are you buying a house?

What is it worth?

Yes, I mean today, as is, no painting or fix up, what you could sell it for.

We all like to think our stuff is worth more than it is.

Hey, it is our stuff.

So, homes, like anything else, are not worth what you paid for them, what the tax assessor says, whatever the mortgage company says, a home is worth what a willing buyer will pay you for it tomorrow.

So, if your home is underwater, say you owe $72,000 on a house worth $45,000, like the client I spoke to this morning, and, with your current income, you cannot both make the payment and eat, may be best to stop paying.

Right away.

In Michigan, it can take a year or longer to foreclose.

Stay for free and save your money for your next residence.

Unless the mortgage company can prove you committed some type of fraud in getting the loan, your mortgage debt will be discharged in the chapter 7 bankruptcy.

That means, you owe nothing, no matter what is done with the house.

Now, filing chapter 7 bankruptcy by itself does NOT take the house out of your name.

You will still be liable as the owner until it goes out of your name.

By foreclosure, or you deeding it back to the mortgage company, or the state taking it for taxes.

But something else besides the bankruptcy has to happen to get your name off the title.

The House Payment In Bankruptcy Story

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