Your home in a Lacey Chapter 7 bankruptcy

Serving all of Thurston County, Washington

Lacey Chapter 7 Bankruptcy Attorneys

(360) 350-4817

Eliminate your your debts.  Keep your property.

What happens to your house in a Chapter 7?

Most people who file a Chapter 7 are able to keep their homes.   In Washington, you can protect up to $125,000 in equity in your home through the “homestead exemption”.

Exemptions are the legal amount of property that is protected in a bankruptcy and the homestead exemption applies to the equity, which is the value of your house minus any mortgages or other liens, of the property you live in.  It also applies to boats and manufactured homes.  The homestead exemption does not apply to rental property or second homes.

You need to keep making your mortgage payments as agreed to stay out of foreclosure in a Chapter 7.  The filing of a Chapter 7 with temporarily stop a foreclosure, but if you can’t get caught up on the mortgage, the mortgage company can get permission to resume the foreclosure from the bankruptcy court.

A mortgage company will want you to sign a “reaffirmation agreement” for the mortgage. Signing this agreement prevents the mortgage from being discharged.  You should be careful about signing reaffirmations when the value of your home is less than what you owe on the property.

Many mortgage companies are offering mortgage modifications.  Filing a Chapter 7 doesn’t disqualify you from many modification plans, though your mortgage company may want your attorney to give them permission to keep talking to you about modification.

If you are struggling to make your mortgage payments because of credit card debt, medical bills, payday loans or other unsecured debt, you can greatly increase your cash flow by filing a Chapter 7 and discharging this problem debt.  By doing so, you may be able to make your home much more affordable.