DETROIT (WWJ/AP) – The mortgage unit of Detroit-based Ally Financial has filed for Chapter 11 bankruptcy.

Ally, formerly GMAC, is 74 percent owned by the U.S. government.

It still owes the government  just under $12 billion from a $17.2 billion dollar loan it got during the financial meltdown of 2008 and ’09.

Ally’s Residential Capital LLC, ResCap for short, filed for bankruptcy protection in New York.

The filing will separate ResCap from Ally’s auto loan and banking businesses.