Keeping Your House in Bankruptcy

If you file a Chapter 7 bankruptcy, you might be able to keep your house. If there is substantial equity in the house (value above the mortgages and other liens) the trustee might force a sale to get money to pay creditors. But most states have a homestead exemption of some type. In Utah, it is $20,000; $40,000 for a married couple. In today's market, that plus the mortgages probably means there is no equity for the trustee and he will abandon the house. Then the issue is between you and the bank. If you're current on your payments, all you have to do is keep making the payments. If you're not current, you will need to negotiate a reaffirmation agreement with the bank, which means you and the bank agree on how you will get current. In some cases, the bank might be willing to reduce the interest rate to avoid having to foreclose on the house.