Declaring bankruptcy with no equity in house is a terrible situation to be in.  This is because if you have equity in the house you can use it to get out of bankruptcy.  Bankruptcy lawyers will guide you through the process.  The house without equity cannot save your from bankruptcy as the monies you owe on your mortgages plus other debts is greater than the sale proceeds of the house.  You may also be evicted from your house if you file for bankruptcy. Declaring bankruptcy can give you a fresh start in your financial life since you are released from your debts. You are able to start afresh managing your finances.  Declaring bankruptcy is not without consequences or repercussions. The bankruptcy law empowers the bankruptcy trustee to sell all your unprotected assets and to use the sale proceeds to pay off your remaining debts.  If you file for bankruptcy with no equity in house you will be in bankrupt status for longer years. Bankruptcy can remain in your credit history for many years and will affect your future chances of obtaining a mortgage or any other loan.

However you can keep your house even after declaring bankruptcy with the help of lawyers dealing with bankruptcy cases.  You need to have sufficient money to bankruptcy payments to clear off your debts and the property tax in addition to meeting your personal expenses.  When the borrower is in bankruptcy the lender cannot collect his dues. The lender prefers to repossess the house. If the borrower wants to keep the house the lawyer sends a letter to the lender to the mortgage company stating the borrower will pay the mortgage payments regularly and would like to keep the house. This letter must be supported by other documents as proof of the borrower’s income, property documents including all other payments and the total monthly repayments. Bankruptcy with no equity in home results in the mortgage lender losing trust in you. It is quite difficult to prove that you can make mortgage payments in addition to your other debts and the tax on the property, all at the same time.

It may be a good option to let go of the house and start afresh by paying off your bankruptcy payments and other dues regularly so that you can build good credit and get out of bankruptcy as quickly as possible.  This allows you the peace of mind to manage your finances more efficiently than when you hold on to your house.  The house instead of being an asset may cause further problems when you file for bankruptcy with no equity in house if payments are not regular or in time. It is better not to live on borrowed assets as life is full of unforeseen events such as a huge medical emergency or a divorce or death resulting in loss of additional income. If your circumstances leave you with the last option of filing for bankruptcy to get out of the stressful situation and you cannot bear it anymore, talk to a bankruptcy lawyer. Declaring bankruptcy with no equity in house is to be handled with proper understanding of the debts and the income and assets of the individual.