Berwyn Bankruptcy Attorney on Treatment of Mortgages

In bankruptcy cases, mortgages are handled in many ways, depending on the particular type of bankruptcy that you’re filing states Berwyn bankruptcy attorney.  If you’re filing a Chapter 7 bankruptcy case, then you must continue to make your mortgage payment if you plan on keeping the property beyond the bankruptcy case.  For example, if you are up to date on your current mortgage and you want to keep your home, then you can keep your home, provided you continue to make your ongoing mortgage payment.  The Chapter 7 trustee will only be interested in taking property such as real estate if there is significant unexempt equity in the property.  In the state of Illinois, you are allowed a $15,000.00 homestead exemption, which can protect your property from the trustee’s long-arm.   

In most Chapter 7 bankruptcy cases, the real estate is going to be protected by the mortgage and by the homestead exemption to the point where the trustee will not look to administer the asset.  If a trustee were to administer the asset, the debtor has the ability to do a buyout where the debtor pays the trustee a certain amount in exchange for the trustee not administering the asset.  If there is significant equity in real estate when someone files a Chapter 7 bankruptcy case, then the debtor may not have the funds to do a buyout.  In that case, the Chapter 7 panel trustee will put the property up for sale, pay the homeowner their exemption, and put the rest towards the administration for creditors.  In a Chapter 13 bankruptcy case, the mortgage is continued to be paid directly.