What happens to the home and the equity in the home if a Chapter 7 Bankruptcy is filed?
May 29th, 2009
I could not afford to pay my mortgage payments so I filed chapter 7 bankruptcy on my mortgage lender. They foreclosed on the home so I just left, vacated / abandoned my property. I drove by a few times and saw people putting notices on my home and signs were put on. The mortgage company obviously took it back and did something to it.
My questions is that, now that I filed for Chapter 7 bankruptcy but my home had equity in it. It is worth, even in this economy, more than the amount I owe the mortgage company - what happens to the equity in the home? do they take it all? do I get anything?
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Usually people are upside down when they are in foreclosure, especially in this economy. But if you have equity in your home, then technically, you are supposed to get whatever is left after the mortgage company took out of the proceeds of the foreclosure sale.
Your mortgage company will sell your home in a foreclosure sale. But, the sad truth is that most of them will sell your home for the amount owed to them. The starting bid will be the amount owed and if no one bids the price up then you are going to get nothing of your equity.
The mortgage company usually wants to recoup the amount owed plus fees for foreclosure, taxes, utilities and sale, etc… once they have all of that, then the rest of the money is yours.