Q&A with Carmen: Will a Chapter 7 or Chapter 13 Save a Home?

Carmen Wong Ulrich
Carmen Wong Ulrich

By Carmen Wong Ulrich

Question:I hear people talk about a short sale on their home. My question is why not file a chapter 7 or chapter 13 to save the home?

Cincinnati, Ohio

Answer: Bankruptcy filers have been cracked-down on since the reforms of 2005 and many looking to get away from bad mortgages and credit card debt in the past couple of years have found themselves denied bankruptcy. Trustees will test your ability to pay your debts not only now, but in the next five years and chances are, if you're filing bankruptcy to try to hold onto your home, they will find you unworthy of filing. Bankruptcy is not a problem-solver that many make it out to be and traditionally, many mortgage debts remain intact (as well as student loans and others) after a bankruptcy filing. Chapter 7 or 13 will most likely not 'save' a home but keep you there and may end up costing you more in time, payments and fees.