Ohio residents may wonder if they can walk away from a home on which they have a mortgage if they are in the middle of a Chapter 13 bankruptcy. Even if the bankruptcy filing consolidated debts and all payments, including the mortgage, are being made through the bankruptcy trustee, it is still legal to abandon a home.
The homeowner may first want to determine if they are eligible for a Chapter 7 filing. This type of filing is designed to help the mortgage payer stay in the home. If the person qualifies, the Chapter 13 filing may be switched to a Chapter 7. If the filing cannot be or is not converted, then the homeowner can stop making payments on the mortgage.
The financial organization that holds the mortgage will then start legal action to foreclose on the home. The time for this process to unfold is not known. The lender may want to negotiate a loan modification, or they may delay moving the home from the bankruptcy protection.
It may be difficult to decide the right course of action when a person is faced with financial difficulties and unpayable debts. Sometimes, the person is striving to hold onto a home, and other times, they may choose to let the home go into foreclosure. With so many decisions to be made, many people value input from a lawyer as they make foreclosure and bankruptcy decisions that could affect them for many years. A lawyer may be able to present alternative courses of action for the indebted person and point out the considerations and benefits of pursuing them.
Source: FOX Business, “Can I Walk Away From Home in Bankruptcy?,” Justin Harelik, Dec. 11, 2013