I recently modified my mortgage, and was considering Filing for Bankruptcy due to other excessive debts I cannot afford and because I am expecting and want to be able to provide for my Child without struggling. I am currently “under water” by 20k, can I still file for bankruptcy, if so what Chapter? And can I keep my Condo, will this have any effect on my recent modification?
Chapter 7 Bankruptcy Attorney
I agree with the answer given by Mr. Araujo. However, I would add that you could most likely file a Chapter 7. If you have recently modified your mortgage I would assume that you are current with the mortgage payments and do not need to catch up on arrears in a Chapter 13. Chapter 7 would potentially discharge your unsecured debts such as credit card or medical debts. You could keep your Condo in a Chapter 7 Bankruptcy if there is no equity in the Condo and there are laws which will protect some equity in a home. Bankruptcy should not effect the modification that you entered into with the Bank.
I strongly suggest that you contact a Bankruptcy Attorney in your area. We can only give general advice and an attorney would make sure that your case is handled properly for your particular situation.
This answer is offered as a public service for general information only and may not be relied upon as legal advice. No attorney-client relationship is created or is intended to be created hereby.
7 lawyers agree
Estate Planning Attorney
You can probably keep your property if you can make the payments; the fact that it's underwater means there's no equity for unsecured creditors to go after in the bankruptcy. It may or may not make financial sense to hold on to the property, depending on the details of your situation. Make sure to discuss this with your bankruptcy attorney once you get one.
Chapter 7 Bankruptcy Attorney
People often ask if they can keep homes, second homes, cars, boats, tax refunds, etc., when they are contemplating Bankruptcy. I always tell them they can keep what they want of they can pay for it, or if the equity or value is protected by an exemption in their State!
There are two types of Bankruptcy for most individuals. Chapter 7 (liquidation) and Chapter 13 (payments are made to a Chapter 13 Trustee to be distributed pursuant to a Plan you and your attorney draft). To determine of you get to keep the property you have to know two things…
1) What is the equity in the property? (I.e., what is it worth minus what you owe on it).
2) Will the exemption laws that are applied to the property protect the equity?
Bankruptcy is much more concerned with equity than it is with debt. If you have no equity in a rental home the Trustee in a 7 or 13 does not have an interest in the property and you may keep it.
If you owe more on the vacation home than it is worth you may be able to use Bankruptcy to reduce the amount of the debt, and again, keep it.
When you have equity in something that is not protected by an exemption then that is an issue that a lawyer must evaluate. See an attorney right away before you act.
Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship.
i agree with the other attorneys' answers and would add that since you have no equity in your home (you stated you were "underwater") would most likely elect to take the Federal bankruptcy exemptions. They are pretty generous and you should be able to exempt almost $12,000 in personal property (i.e., cash, stocks, excess equity in a vehicle). You would want to keep up with your condo association fees if you are keeping your home because any association fees incurred after the date of the bankruptcy filing is non-dischargeable.
This answer is to be considered general advice and may not be the actual law in your jurisdiction. It also does not constitute an attorney-client relationship or privilege.