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Can I Keep Discharge My Mortgage in Bankruptcy but Stay in My House? – Sage

“Dear Steve,

I purchased my house during the bubble. The morgage is severely upside down. I was able to secure a loan modification and it has made monthly payments manageable. I have some major debt problems and am looking at filing for bankruptcy.

I know that I would be allowed to keep my home if I reaffirm the loan. Because of the dimished value of the house (as well as a second mortgage), I do not wish to do this.

SO, the question is: If I file for bankruptcy and am up to date on the mortgage payments, will the bank let me stay in the house if I continue to pay? (I assume this would absolve me of any continued long-term financial responsibility for the house.)

Thanks for all you do, Steve:)


Dear Sage,

Interesting question.

Let me see if I have this straight, what you want to do is include the mortgage in a Chapter 7 bankruptcy and discharge it but continue to live in the house by making the mortgage payments. Is that right?

I have talked to a local bankruptcy attorney about doing a Chapter 13 bankruptcy to stay in your house but put your other debts on a reduced payment plan?

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • sage101

    I wish to discharge all my debts and believe that I would qualify to do a Chapter 7. I do not want to reaffirm the upside down mortgage debt.

    Will the bank let me stay in the house if I keep paying? It didn’t seem likely to me, but I read online somewhere that you could. Doesn’t seem likely, huh?


    • Steve Rhode

      While I have heard of cases like this happening, either because the bank does not want the empty house back now or whatever, unless you get a written agreement with the bank you can be kicked out at anytime, and almost worse off, you will still be obligated to pay property taxes for a home you no longer own.

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