Updated By Cara O'Neill, Attorney. Filing for Chapter 7 bankruptcy will wipe out your mortgage loan, but you'll have to give up the home. Why? Your lender's right to foreclose doesn't go away when you file for bankruptcy (although.

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There are several situations where a Chapter 13 is preferable to a Chapter 7. A Chapter 13 bankruptcy is the only choice if you are behind on your mortgage or.

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