New here... can I keep my house?

[KimD]

My husband and I are comtemplating bankruptcy and I have a consultation next week with an attorney but I'm hoping someone can answer this for me. I had a job change 2 years ago and my income has been pretty much cut in half. We have since had credit cards sent to collections after not being able to pay. We have a car lease that we want to surrender. We want to keep our house but the IRS allowance is less then what our mortgage is. Does that mean we will have to sell, we will be unable to file or that's just what they will "credit" us for the expense? The "allowance" is $1,320 but our payment is $2,400. I cannot see there being any equity in the home at this point.

Please forgive me if that's a stupid question but I'm brand new to all this and not sure how everything works.

Thank you so much in advance for your help!!!

[FreshLikeADaisy]

KimD, it's not a stupid question at all, but it's not really answerable until you know you'll be filing for a Chapter 7 or a Chapter 13.

In a Chapter 7 (liquidation), what is far more important than the ongoing payment amount is how much equity you have in your house (none) and whether your state's exemptions cover it. If you were to file Ch7, you would have the option of keeping the house because you have no equity, whereas if you actually had equity there would be the chance you would have to surrender it as an asset for the trustee to sell. Also, you might find that your house pmts are much less burdensome once you have little other debt, or you may decide it's not worth it for you to keep it and walk away freely, which you are entitled to do.

In Chapter 13 (repayment), the pmt amounts become much more important, because they have to fit into your repayment plan, but surrendering the house as an asset to be sold is no longer a question. Many people file a 13 solely in order to keep assets that otherwise would have to be given up to the trustee for sale.

Obviously there's a lot more involved in this, which your atty will tell you, but that's the simple answer. Good luck!!!