What happens in chapter 7 in Ohio if I am upside down on my mortgage?

When it comes to filing bankruptcy in Ohio, Chapter 7 bankruptcy allows for various scenarios to play out in terms of upside down mortgages. The bankruptcy rules of procedure is a process the bankruptcy trustee follows to determine what should occur in any type of bankruptcy proceeding. There are several things considered, including your ability to repay your loan, your goals in keeping your home and the lender’s rights.

Understanding Options

In nearly all situations, the goal of Chapter 7 bankruptcy is to provide relief to the bankruptcy filer from debts he cannot repay. A mortgage is treated like any other asset based loan. If you are current on the loan and want to remain in the home, the loan is reaffirmed and continues after the bankruptcy, assuming the value of the home’s equity (if any) is not above the limits of the bankruptcy exemptions.

If you have an upside down mortgage, consider the following:

• The mortgage does not automatically change this. You can apply for a modification from your lender, but in most cases, you will be responsible for repaying your loan.
• In Ohio, which is a recourse state, your lender can come after you legally for the funds if you walk away from your mortgage, even if it is upside down.

In all situations, it is vital to use an attorney to help you through the process. A bankruptcy attorney will help you to decide what the best, financially beneficial process is to take. In some cases, you may wish to walk away from your home while in others, you can work with your attorney to keep it.