Will I get kicked out of my house after I file bankruptcy?

No! Not necessarily.  You will not automatically get kicked out of your house after a bankruptcy so don’t worry.  Even is chapter 7 there is a stay that covers all of your property including your house and it is created when the bankruptcy case is filed.  A bankruptcy stay prevents any action being taken against you including evictions or foreclosures.  You will therefore not be kicked out of your house after filing bankruptcy.

The problem is that a stay in a chapter 7 only lasts for the three months of the bankruptcy.  After the three months is up the bank or landlord can proceed with a foreclosure or an eviction against you.

Once the house is sold in a foreclosure you will be contacted by the new owner who will want you to move out.  You can then ask for cash for keys.  Ask for $2000 to $3000 to move out because you will have moving expenses and new rent and deposits to pay.  Negotiate with the new owner and get what you can.  They can evict you if you do not move but they would usually rather negotiate.

A Chapter 13 bankruptcy will allow you to stay in your home if you have disposable income (income above and beyond your bills) and if you can afford the payments on the home.  A chapter 13 is a debt repayment plan where you pay back some of your creditors over a three to five-year period.  A chapter 13 will allow you to make up all of your unpaid back payments (arrearages) on your house but most people realistically can’t afford to make these payments.  Also most people prefer the speed and finality of a chapter 7.

A chapter 7 bankruptcy allows you to discharge all of your unsecured medical, credit card, and personal loan debt in 90 days and then you are done with the bankruptcy and you can move on with your life debt free.  With a 13 you have to make payments for up to 5 years.  The chapter 7 will delay the sale of your home in a foreclosure for 2 months or possibly far longer as there is no way to currently predict how quickly a lender will proceed with a foreclosure.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation about a chapter 11 bankruptcy or for any other advice about bankruptcy or debt at (619) 702-5015.  Call now for free credit report and analysis!  For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

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