If I file a Chapter 7, can I keep my house?
Question Details:Mortgage and homeowner's insurance is up to date.
It depends on just how much equity that you have in your house. By law a certain amount of equity is exempt; if you are under that amount than you can keep your home since there is no equity to distribute to creditors. The homestead exemption under AZ law is $150,000.
However, if you can keep your home you will then need to decide whether or not you want to "re-affirm" the mortgage debt.
If you re-affirm then you remain personally liable for the debt and if the home should later go into foreclosure and sells for less than the remaining mortgage balance, you can be held liable for the deficiency. The upside to this is that any payments that you make will be reported on your credit report and help you to re-establish credit.
If you don't re-affirm the debt, then you cannot be held liable for any deficiency should it come down to that. However, any mortgage payments that you make will not be reported on your credit report so you won't build up your credit as quickly as you might if you were to re-affirm.
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