Many worry about their living arrangements post-bankruptcy. What happens to my home if I file for bankruptcy? Will you be able to buy a home in the future if you’ve got a bankruptcy on your record? Will you be approved for long-term lease agreements even though you’ve filed for bankruptcy?
Addressing the Urban Myths on Bankruptcy and Your Home:
The bank does not take your home if you file for bankruptcy – the bankruptcy filing MAY trigger another reason that could result in the home being sold though.
Bankruptcy filers who “lose their home as a result of bankruptcy” are probably only telling part of their story. They might have been delinquent on their mortgage payments prior to filing for bankruptcy. They might have filed as a means of stopping the sale of the home, but when they were unable to bring the mortgage current through repayment or approved loan modification, the home was still sold. The bankruptcy simply delayed the sale of the home in foreclosure.
The Foreclosure and Bankruptcy Process:
- The lender is notified of the bankruptcy.
- The lender will file a motion with the bankruptcy court requesting that the house be removed from bankruptcy protection.
- Once the motion is granted, the bank will continue with the sale of the property.
Having said that, the bank cannot simply take the house because the homeowner filed for bankruptcy. But if the homeowner cannot make their monthly mortgage payments and the lender isn’t willing to work out a loan modification, the bank can take the property back. But it is NOT triggered by the bankruptcy. The bankruptcy is seen as one more obstacle in the bank’s path towards foreclosure on your property – not a cause or reason to start the foreclosure process.
If you are considering filing for bankruptcy and are still wondering, “What will happen to my home when I file bankruptcy?” contact the southern California bankruptcy experts at Westgate Law.