Legal Question in Bankruptcy in Virginia

Re: Home Mortgage

Randy Masters is correct. To keep a home in Chapter 7 or 13 Bankruptcy mortgage payments must be made as they come due, but in Chapter 13 bankruptcy mortgage payments which were past due before the bankruptcy was filed can be broken up and paid over up to five years. It's important to consult with an experienced bankruptcy attorney about your individual situation.

Re: Home Mortgage

Many people are able to file Chapter 7 bankruptcy and keep their real estate. The issue is how much equity they have in the property. From your question, we do not have enough facts. You state that she lived in the home for five years, but we do not know how much she put down as a down payment. What she needs to do is find out the tax-assessed value of the home and then subtract the "payoff" of the mortgage. She can call the mortgage company to get the payoff. If she has a first and a second mortgage she can subtract the payoff amount of both the first and second mortgage. After subtracting the payoff from the fair market value of the home, she will have a rough estimate of what the equity is in her home. If someone does not have much equity in their home then they can file chapter 7 bankruptcy and not lose their home. Even if there is some equity in a debtor's home, Virginia law allows $5,000.00 per spouse as a homestead exemption, which means that a debtor can file a homestead deed and exempt a certain portion of their equity in their home in order to "protect it." But even if we assume that your sister has substantial equity in her real estate (say, $15,000.00 or more), she can still file a Chapter 13 bankruptcy and get protection from creditors, without losing her home. In a Chapter 13 bankruptcy, a debtor would never lose her home. She should see a bankruptcy attorney for more details about her options under either Chapter 7 or Chapter 13 bankruptcy.