Save my house
As long as you are current on your mortgage, you may keep your home after a Chapter 7 assuming the equity you have in your home does not exceed the homestead exemption amount in Utah. If you are not current on your mortgage then you may or may not be able to stay in your home. If you are too far behind to catch up within a fairly short period of time, you may want to look at a Chapter 13 bankruptcy.
If you do not want to stay in your home, then you should stop paying any mortgage. The Chapter 7 bankruptcy will not stop the bank from foreclosing on your home, but they will not be able to come after you for any money you may owe on the house.
If you have too much equity in your house in Utah, then Chapter 7 bankruptcy may not be a good option for you. A state’s homestead exemption laws govern the amount of equity in your home you may have in your home that will be protected from a bankruptcy trustee. Utah has a relatively small homestead exemption, while Nevada has a relatively large homestead exemption.
Lien Stripping
If you have a house in which you owe more on your first mortgage than what your home is worth, then you may through a Chapter 13 bankruptcy strip off any second mortgage or any other junior lien off of your home. The second mortgage is called a “wholly unsecured” lien or encumbrance against your home.
We get rid of the second mortgage (or third mortgage) by filing a motion with the bankruptcy court after you have filed a Chapter 13 bankruptcy. We have to show through the motion that your house is worth less than what you owe on your first mortgage.
If the court grants finds that your home is indeed worth less than what you owe on your first mortgage, then your second mortgage will be stripped off of your property when you complete all the Chapter 13 plan payments to the Chapter 13 trustee.
Please fill out form for a FREE online Consultation.
Comments or questions are welcome.