Bankruptcy

• What is Bankruptcy?
• Will I lose my house?
• In what other ways can bankruptcy in California help?
• What happens to my credit after I file bankruptcy in California?
• How much does it cost?
• What do I need to do?

Will I lose my house?

No, not if properly planned. In a Chapter 7, if there is no equity in the house (value of the house today minus costs of sale and payoff balances on all liens) the trustee (a private attorney or accountant appointed by the court to oversee the case) will not bother with attempting to sell your home to pay off your creditors. However, you must make sure that you continue to make your mortgage payments. Even when you are in bankruptcy in California, a lender keeps the right to foreclose on the property if you don't make the monthly payments. If there is unexempt equity in the house, then you can come up with a lump sum to pay that to the trustee in a Chapter 7 case, a procedure known as "buying the equity." Or you might want to consider a Chapter 13. In a Chapter 13 you will pay the amount of equity in your home to your creditors, plus catch up if you're behind on payments to the mortgage lender, over a period of three to five years.