Leaving House Outside Bankruptcy

September 29, 2021

Can I Leave My House Outside of the Bankruptcy?

You need to file bankruptcy soon.  You are worried about losing your house.  Can you leave your house outside of bankruptcy?   Generally, the answer to this is “yes.”   You can many times “leave your house outside bankruptcy,” but you will still need to list it in your bankruptcy petition as one of the items that you own.

Leaving Your House Outside of Bankruptcy

Most people use the term “leaving your house outside of bankruptcy” to express the fact that they want to keep paying for their house.  The bankruptcy filers simply want to keep their house and keep paying for it.   They do not want to lose the house during bankruptcy.

ost Chapter 7 and Chapter 13 cases unless you have far too much equity in the house (such as the house being halfway or completely paid-off).  It is part of your bankruptcy attorney’s job to predict whether there is any chance of you losing your house.  In most cases, however, you can file bankruptcy in a way to keep your house with no problems.

Technically You are Always Including Your House

House outside of bankruptcyEven when you “leave your house outside of bankruptcy,” you are always technically including it in the case.  This is because all assets and debts must be listed and addressed in every bankruptcy case.  You will include your house as an asset and file a paper that expresses your intention to keep it.

Then, in Chapter 7 you may decide to execute a new loan agreement on the house called a “reaffirmation agreement.”  By signing this new agreement, your mortgage on your house becomes all official again after you file the Chapter 7 case.  It is like you never filed bankruptcy on that mortgage loan at all

You do not necessarily need to sign a reaffirmation agreement sometimes to keep your house.   The most important part is to make sure the payments on the house stay up to date.  Your attorney usually will explain reaffirmation agreements during your bankruptcy case if you file under Chapter 7.  There can be advantages or disadvantages to signing a new loan agreement (reaffirmation) during your bankruptcy case.

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