Legal Question in Bankruptcy in Maine

home value

Due to outside forces our homes value is significantly below our mortgage value approx $60,000 less. In declaring bankruptcy and allowing the mortgage company to take the secured house would that absolve us of all of the mortgage debt?


Asked on 4/21/04, 12:54 pm

1 Answer from Attorneys
Jerome Gamache Ainsworth Thelin & Raftice, P.A.

Re: home value

There are 2 types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is a liquidation of current assets and Chapter 13 establishes a plan for payments from future wages.

The availability of bankruptcy is to enable someone to get a "fresh start". Once you file bankruptcy, you are relieved from PERSONAL liability to pay for most debts that exist when you file (I won't go into the debts that are not covered). This means that when it comes to debts that are secured by property such as real estate or a car, you are not PERSONALLY liable to keep paying, but if you stop paying, the creditor still has the right to reposess the property to reimburse itself for the debt to the extent of the value of the property.

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Answered on 4/23/04, 7:52 am


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