In a bankruptcy, can you file on all unsecured debt but still work with the bank to keep your home?

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In a bankruptcy, can you file on all unsecured debt but still work with the bank to keep your home?

Have over $47,000 in unsecured debt. I would like to know if we can file on all that and still keep our mortgage going with the bank to keep our home? Financial issues have us beyond stressed and we don’t want to lose our home on top of it. We have 2 kids.

Asked on February 23, 2011 under Bankruptcy Law, Wisconsin

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Ok, take a deep breath.  I can understand how it must feel to be in this position and feel like there is no way out.  But the answer to your question is yes, you can choose to keep your house in a bankruptcy proceeding.  When property is secured (like a house with a mortgage) rather than unsecured (like credit cards) you have a choice to retain the collateral, and do what is known as reaffirm the debt (sign a written document agreeing to continue making regular or agreed-upon payments on the debt and grant the creditor all prebankruptcy rights upon a subsequent default).  I think that once you get the unsecured debt off your back you will feel a lot lighter and be able to take care of the house and moving forward.  Good luck to you.


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