Asked in Real Estate Law and Bankruptcy for Arkansas

Q: I am the buyer of real estate w/ an owner carry contract. There is a five-year balloon note which is coming up…

I’ve had a change in job positions and had had to stop paying my credit cards, which is affected my credit therefore, I don’t have the credit to refinance. Can I claim bankruptcy and include the house and the amount owed in the bankruptcy and keep the house. Would want the repayment type of bankruptcy not sure which is which.

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3 Lawyer Answers
W. J. Winterstein Jr.
PREMIUM
Answered

A: The "repayment type of bankruptcy" is a Chapter 13 bankruptcy case, which is fortuitous because, thanks to a Supreme Court case penned by Clarence Thomas (that flies in the face of Section 306 of the Bankruptcy Code), a debtor cannot modify a home loan in a Chapter 7 case.

Note that in every bankruptcy case. you must list ("include") every asset (broadly defined by the Code) and every claim against you, whether you agree with the claim's validity or not, and you do so under penalty of perjury.

If you qualify for a Ch. 13, and the home's retention is in the best interest of the bankruptcy estate, and you can cement a "cure" on the house debt within five years, then yes, you should be able to retain the house.

I strongly recommend that you engage/confer with experienced Arkansas counsel to accomplish your goals.

Martha Warriner Jarrett and Timothy Denison agree with this answer

A: Consult a bankruptcy attorney to review your entire financial situation and make an informed decision.

James L. Arrasmith
PREMIUM
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Answered

A: Filing for bankruptcy might help you manage your debts and keep your home. In a Chapter 13 bankruptcy, you can create a repayment plan that includes your mortgage payments, which may allow you to stay current on your house. This type of bankruptcy is designed to help individuals reorganize their finances while retaining their property.

Including your home and the amount owed in the bankruptcy is possible, but it depends on your overall financial situation and the terms of your mortgage. The repayment plan would need to cover your mortgage obligations, so it's important to ensure that you can meet these payments under the plan.

It's advisable to consult with a bankruptcy attorney who can review your specific circumstances and guide you through the process. They can help you understand the implications and determine the best strategy to protect your home while addressing your debts.

Timothy Denison agrees with this answer

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