Why do I have to list my home on my bankruptcy?

Posted On: November 2011


Editor: Tiffany Brewington

Q: Why do I have to list my home on my bankruptcy when I don’t want to get rid of my home?

A: I am often asked, “Why do I have to list my home on my bankruptcy when I don’t want to get rid of my home?” The answer is that you must list all of your assets and all of your liabilities on your bankruptcy petition, regardless of what your intentions are with those assets and liabilities. This mandate comes directly from the bankruptcy code which governs how bankruptcy cases are administered. However, simply listing your home does not mean that you are giving up your home. Let’s explore:

The bankruptcy code provides for certain exemptions in property, including a home. The bankruptcy code provides for exemptions under either Federal and/or State law depending upon which state the debtor resides. Here in Illinois, the bankruptcy code provides that the State of Illinois exemptions be used. To put is simply, a debtor can protect up to $15,000.00 in equity for a primary residence. In the case of a joint filing, husband and wife, the exemption amount doubles to $30,000.00. Thus, a person can file for Chapter 7 bankruptcy and still maintain his home, provided that he doesn’t exceed the equity exemption amount, and provided he is up to date on his payments and continues to make timely payments.

Although the legal obligation to pay the mortgage is eliminated in the bankruptcy, the debtor has the ability to make voluntary payments in an effort to keep the property. The bankruptcy code does not mandate that a reaffirmation agreement be entered into in order for the debtor to keep the property. It really all comes down to timely payments. If the debtor is current with the mortgage company, he can continue to live in the property and pay down the mortgage debt. If he is behind on payments, the mortgage company can elect to begin foreclosure proceedings to eventually remove the debtor from living in and owning the property.

Thus, don’t be alarmed that you must list your home and mortgage company on your bankruptcy petition. If you are up to date and provided that you do not have equity above and beyond the exemption amount, you will be able to continue to make future mortgage payments and you will continue to own your home.

For all your Bankruptcy-related questions, contact Illinois Bankruptcy Attorney David M. Siegel here or call (847) 520-8100.

Posted On: November 2011

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