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Stay in House After Bankruptcy?

In Chapter 13 bankruptcy, a debtor is able to retain some of his or her assets while also setting up a payment plan that allows him or her to pay off debt. The bankruptcy is exited once all debts are paid.

Chapter 13 Stay Order

When a Chapter 13 bankruptcy is filed, it ensure that a stay order is issued, which means that all collection activities against the debtor are stopped while arrangements for back-payments are being developed.

Retaining Assets During Bankruptcy Proceedings

The debtor also has the option to retain some assets, such as a home, during the bankruptcy proceedings. The debtor can also surrender the home to a mortgage company who would then take possession of the property. The mortgage company must apply for the stay order to be deferred in order to start foreclosure proceedings. If the stay order is not lifted, the mortgage company must wait for the bankruptcy to be exited to take control of the property. The mortgage company must apply for the stay order to be lifted within 60 days of receiving notification that the bankruptcy is occurring. If the stay order is lifted, there’s no guarantee that a debtor will be able to retain possession of the home. And the time the debtor can remain in possession of the house is limited to the length of the foreclosure proceedings – usually around 12 months.

Notification of Vacating Property

The most notification a debtor might receive regarding living in the house will be a notice to vacate once the foreclosure proceedings conclude. Upon the commencement of the foreclosure proceedings, a debtor will most likely be evicted from the house.  

Sources: Law Dictionary, How long do I have to live in my house after filing bankruptcy?, 2014

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