How to Surrender My Home in Chapter 13

By Colin Holloway

Chapter 13 bankruptcy reorganization is a plan for wage earners with regular income that allows debtors to keep assets while paying down their creditors in three to five years. Although Chapter 13 plans protect homes, surrendering the property during bankruptcy can help a homeowner discharge significant mortgage debt and make the repayment process easier.

Step 1

Fill out official Chapter 13 bankruptcy forms that require you to list debts and assets, identify creditors, and provide financial information. The necessary forms are available at the bankruptcy court for your district.

Step 2

Create a reasonable plan to repay creditors over time that surrenders the home. When creating the repayment plan, you need to specifically articulate your intention to surrender the home. If your plan is vague or incomplete in its intent to repay creditors and surrender the home, it will not be accepted.

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Step 3

File the Chapter 13 petition, which includes the official forms and repayment plan that notes your intention to surrender the home, with the bankruptcy court. Every state has a directory that provides the addresses for its bankruptcy courts; you can look online to identify the appropriate location to file the bankruptcy petition. When filing the Chapter 13 forms and repayment plan, you will be required to pay fees to the court.

Step 4

Confirm the Chapter 13 plan at a bankruptcy hearing scheduled by the court after the initial documents are filed. During the hearing, the judge will review the plan with you, confirm your intention to surrender the home, and explain what effect surrendering the home will have on the bankruptcy debt should there be questions. If the Chapter 13 plan is satisfactory, the judge will officially approve it and allow you to surrender the property.

Step 5

Prepare to move out of the home before the foreclosure sale. After the confirmation hearing in which the home is surrendered, the lender responsible for the mortgage will be allowed by the court to foreclose the home. Within 90 to 120 days, the bankruptcy court will set a date for the foreclosure sale. Once notified of the sale date, you can move out before it occurs.

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Facts About Chapter 7 Bankruptcy


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How Long Is Chapter 7 Active?

A Chapter 7, or debt elimination, bankruptcy case is active until the court issues your final decree, the judgment that officially closes the case. The average Chapter 7 bankruptcy case remains active for around three to six months. The duration will depend on whether you had assets when you filed; a non-asset bankruptcy goes much faster. If you fail to follow court orders or fulfill debtor requirements, the court may dismiss your case before you obtain a discharge of your debts.

Does the Bankruptcy Court Allow You to Pay Outside the Chapter 13 Plan?

When you file a petition for bankruptcy protection, you are asking a federal court to protect you from creditors. The court issues an automatic stay of all collection actions, including lawsuits, and gives you time to reorganize your finances and prepare for a fresh start. In a Chapter 13 bankruptcy case, you set up a partial repayment schedule under the guidance of a court-appointed trustee, but you still may be able to handle some debts outside of the repayment plan.

What Happens If You Include Your Home in Chapter 7?

When a homeowner files for Chapter 7 bankruptcy, what happens to the home depends on various factors, including how much equity the homeowner has. A Chapter 7 bankruptcy wipes out all the debts that federal law allows you to include on the discharge, freeing you of legal responsibility for those obligations. You'll also get an automatic stay against your creditors when you file, which temporarily prevents the creditors from starting or proceeding with any collection actions. The automatic stay lasts until the case is discharged or dismissed.

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