If you are like many homeowners in Virginia who struggle financially, you may look to Chapter 7 bankruptcy as a viable debt relief option. However, while Chapter 7 has many appealing options, there are a few pitfalls, the biggest of which is you are likely to lose your home. Fortunately, there are a few instances in which filing for Chapter 7 will not result in the loss of your home, which SFGate details for your convenience.
For one, if you are underwater on your home and decide to file for Chapter 7, your bankruptcy trustee may not be able to sell it to make enough money to pay off creditors. Your home must contain enough equity to first pay off the mortgage on your home before your trustee can begin to pay off other creditors.
Another way you can keep your house in Chapter 7 is if you reaffirm your mortgage. When you reaffirm your mortgage, you exclude it from your Chapter 7 entirely. Though reaffirmation comes with many benefits, the greatest pitfall is if you default on your mortgage, you risk losing your home and damaging your credit all over again.
Another way you can keep your home in Chapter 7 is if you and your mortgage lender agree to allow you to discharge the debt but to keep making payments toward it. Doing this may even allow you to obtain a modified mortgage from your financier.
The information shared in this post is for your learning purposes only. You should not use it as legal advice.