Homeowner Bankruptcy FAQs

Will I lose my home?

Answer: Filing bankruptcy does not mean you will lose your home. There are different types of bankruptcy (Chapter 7, 11, 12 and 13), but each of them recognizes California residents' rights to retain equity in his or her home. The protectable equity varies from $75,000 to $175,000.

What will happen to my loan modification request?

Answer: You and your lender may continue to work on loan modification requests during the course of the bankruptcy. While lenders previously put modification requests on hold once bankruptcy was filed, that is no longer the case; most will continue to work with you.

Will a bankruptcy filing delay foreclosure?

Answer: Yes. Once bankruptcy is filed, the lender cannot take the next step in the foreclosure process without getting bankruptcy court approval. The delay may only be 30 days, but likely it will be much longer.

Can I eliminate my second mortgage?

Answer: Not in Chapter 7, but this relief is available in Chapters 11 and 13, if your first mortgage is in an amount greater than the value of your current residence.

Will I ever be able to buy another home?

Answer: Yes. While the bankruptcy will appear on your credit report for years to come, the more time that passes between your bankruptcy and your new home purchase, the less impact it has. If you otherwise qualify for a new loan, a home purchase two years after your bankruptcy is possible.

For answers to other questions, review our general bankruptcy FAQs or contact us to arrange an appointment.