Arizona residents considering bankruptcy may be interested the case of one man who has filed for Chapter 13 bankruptcy but is planning to walk away from his home. While the man has already undergone a loan modification, he suggests that he is still unable to pay the mortgage.
Under the terms of Chapter 13, the individual filing must plan on repaying some or all of the acquired debt over a period that can range from 3 to 5 years by transferring funds to a trustee who distributes payments to those holding the debt. Under Chapter 7 bankruptcy, unsecured debt, which includes credit cards and some personal loans, is wiped out. The person filing is also able to keep assets such as a home and vehicles under the terms as well. According to a writer who offers advice concerning bankruptcy, the man in this case may have originally filed Chapter 13 to save his home rather than Chapter 7 because the man’s household income is too high.
The writer suggests that the man attempts to determine if he is eligible for Chapter 7. However, If the man is unable to convert his bankruptcy claim from Chapter 13 to Chapter 7, he should stop making mortgage payments, file a motion to remove the property from protection under the bankruptcy and start the process of foreclosure.
While this strategy may be effective for the man in this case, bankruptcy is often a complicated process. Individuals considering the debt relief of bankruptcy may benefit from consultation with an attorney who may be able to consider the details of each case and might offer advice tailor to a client’s particular circumstances.
Source: FOX Business, “Can I Walk Away From Home in Bankruptcy?“, Justin Harelik, December 11, 2013