If you file Chapter 7 and include your home/mortgage, are you able to later retract the home/mortgage beforeyourbankruptcy is final?

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If you file Chapter 7 and include your home/mortgage, are you able to later retract the home/mortgage beforeyourbankruptcy is final?

I’ve been unemployed for a year and recently filed Chapter 7 bankruptcy. To prevent the pending foreclosure of my home, I included my home in my filing. I had been told that it was better to have a bankruptcy on your record than to have it and a foreclosure. I had my initial hearing on 8/5/10 where creditors were allowed to show up – none did. I am now waiting to for the judge to approve/dismiss the debt. I think there’s a set period of time between these 2 events. If by chance I were to gain employment in next week, could I go back and retract my home from the filing if the mortgage company would work with me?

Asked on September 2, 2010 under Bankruptcy Law, Alabama

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Chapter 7 filings have increased just like home foreclosures and short sales.  Bankruptcy is usually considered the last straw in a stream of actions for someone to lessen his or her debt or at least try to keep up with current debt.  In a Chapter 7, if you claim your home without a homestead exemption, your mortgage loan may be discharged but the promissory note is still there and the company (lender) can simply foreclose and take your home.  You can avoid this and continue to pay your mortgage by speaking with the bankruptcy trustee and filing the proper paperwork to take your home mortgage out of your bankruptcy filing.  Further, you also have the option not too long after bankruptcy to reaffirm your debt directly with your lender to allow you to keep your home and continue to pay on your mortgage.


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