Hopefully, nothing at all.
Surrender — If you want to surrender the home, filing a chapter 7 will usually buy you 2-3 additional months of living in the home rent free. Your chapter 7 bankruptcy will discharge any remaining liability you have on the mortgage.
Keep — If you want to keep the home, then keep making the mortgage payments on it. If you have equity, I can generally protect it. I can protect up to $30,000 of equity per person on the title under the Utah Homestead Exemption. But, you have to be living in the home and on title for the home. This means that if you are a married couple filing chapter 7, I can usually protect $60,000 of equity in your home.
Remember, equity is the amount of money you’d make if you sold the home and paid off of the mortgage and realtor. It is the money that’s left over.
If you have more than $60,000 of equity, then there’s a good chance that the trustee will want to sell off your home, give you $60,000, and use the rest to pay creditors.
Keep, but behind on payments — If you are behind on the home, you’d better catch up quickly, work out a loan modification, or convert to a chapter 13 so that we can propose a repayment plan on the mortgage arrears. Otherwise, the mortgage company has every right to start foreclosure proceedings.
Surrender — If you want to surrender the home in the chapter 13, it will discharge your liability on the mortgage, and you’ll generally be able to live there for another 2-3 months rent free before you have to move.
Keep — I can protect the same amount of equity. If you have more than $60,000 of equity, we still don’t lose the home. Let’s say you have $80,000 of equity. I can protect $60,000. With the remaining $20,000 of exposed equity, I take out realtor’s fees of $12,000 (just a guess). This leaves you with $8,000 of exposed equity. We simply propose to pay an extra $8,000 in our chapter 13 over 5 years to protect the equity and pay our creditors a little bit back.
If you have mortgage arrears, then we can propose a plan to catch up on those arrears through the chapter 13 case.
Just remember that in both a chapter 13 and a chapter 7, you must keep making mortgage payments after we file, if you plan on keeping the home.