In my article on Chapter 13 I explained how you can save your home from foreclosure. In this article I’m going to explain how you give up your home and live rent free during and after bankruptcy.

If you file a Chapter 7 or 13 you can choose to “surrender” your home and not pay for it any longer. If you choose to do this the bank is then allowed to foreclose on your home. After the foreclosure process is completed you have six months, under Michigan law, to “redeem” your home. Redeeming your home means paying off the mortgage.

Most people are not able to redeem. However, during these six months, the banks will not put you out on the off chance that you will. Thus, you have the six months, plus any time before the foreclosure that you can live in your home rent free. Even better, some banks do not push you out afterwards! I have personally known of cases where people have lived in their homes as long as two years after the foreclosure rent free!