When people consider the possibility of bankruptcy, they are often concered with losing some of their assets. In particular, we often get asked whether people will lose their house if they file a Chapter 7 Bankruptcy. In Dallas, filing a bankruptcy does not mean you will automatically lose your house.
For staters, Texas has a favorable homestead exemption. If your house is your primary residence, it will be exempt from creditors as your homestead. That being said, it is important to remain current on your mortgage. While most of your debts generally get discharged in a Chapter 7 Bankruptcy, you will have the option to reaffirm your obligation under the mortgage and retain that debt. Typically, a Reaffirmation Agreement is entered between the Mortgage Creditor and the Debtor which allows the Debtor to remain personally liable for the Mortgage debt after the bankruptcy case is closed. The debtor continues to make their regular mortgage payments and retains the property.
In certain situations, some debtors may choose to not enter into a Reaffirmation Agreement with the Mortgage Creditor. Debtor’s who do not enter into a Reaffirmation Agreement will have their personal obligation under the mortgage discharged through their bankruptcy. However, as long as these debtors remain current on their mortgage and continue to make their monthly payments, they can keep their house as well.
For more information about how a bankruptcy may affect your house or Reaffirmation Agreements in general, pleasecontact a Dallas Bankruptcy Attorney.
