monkey mom asked:
My husband and I were planning to file Chapter 13 bankruptcy (we are seeing lawyer tomorrow) and I just found out that we should qualify for Chapter 7 too. We own a home, but only have 10k in equity in it. This wouldn’t even begin to touch our 43k unsecured debt. I’ve heard that not eveyone loses their homes in Chapter 7. Does anyone know if this is true?
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how in the heck should i know
If you want to keep anything with a secured loan in Chapter 7, you have to reaffirm the loan during the bankruptcy (which means you agree to pay that debt).
Yes, it is true that a Chapter 7 does not mean you will absolutely lose your home; however, losing your home is more likely in a Chapter 7 bankruptcy than in a Chapter 13.
Chapter 7 is designed to discharge your debts in exchange they sell your properties and use that as payment to the creditors.
If after selling all qualifying properties (such as your car) and it is still not enough that is when people lose their homes in a Chapter 7. And usually when debtors have to file for bankruptcy they don’t have anything much to sell.
If you want to keep your house a Chapter 13 allows you to work out a repayment plan and keeping your house will be more secure.