Will I Lose My House if I File for Bankruptcy? 

If you are currently overwhelmed by debt and have started to consider bankruptcy, you likely have a lot of questions and concerns, such as whether you will be able to keep your home, car, or other important assets. The answer, unfortunately, is not always a straightforward one, and it relies heavily on your specific financial situation. However, we will do our best to cover the basics here to give you an idea of how bankruptcy may affect your home-owning status. If you have questions about how bankruptcy will affect your ability to remain in your home, it is important to seek professional legal advice prior to filing. 

Can I Keep My House With Chapter 7 Bankruptcy? 

Whether you will be able to keep your home depends on which kind of bankruptcy you file for, as well as a number of specific financial criteria. When it comes to Chapter 7 bankruptcy, it is not certain that you will be able to keep your house. There are a number of factors that can influence your ability to remain in your home one way or the other. Chapter 7 bankruptcy functions by liquidating a portion of your assets in exchange for forgiving all of your eligible debt. Not all of your assets are eligible for liquidation. Certain assets are “exempt.” Exempt assets include those assets that are reasonably necessary to maintain a home and employment. This makes it possible for you to keep your home, however, additional criteria apply. 

For instance, it is important to understand that mortgages are secured loans, which are not eligible for forgiveness under Chapter 7 bankruptcy. This means that you will have to be able to continue making mortgage payments in order to keep your home. Chapter 7 bankruptcy also does not forgive past missed mortgage payments, so if you are already behind on your mortgage and are unlikely to be able to catch up on past and current payments, bankruptcy will not help you keep your home. 

While filing for a chapter 7 bankruptcy will result in an automatic stay on collection efforts for your mortgage, this stay will lift as soon as the bankruptcy proceedings are finalized at which point the mortgage-lender can initiate foreclosure proceedings. The amount of equity that you have in your home is also a determining factor. If you have multiple mortgages or more debt that you are able to protect, it is unlikely that you will be able to keep your home throughout bankruptcy. Of course, there are a number of factors involved in this decision. 

If you are unsure of whether you will be able to keep your home by filing for bankruptcy it is important to consult with an experienced bankruptcy attorney who can assess your specific circumstances and advise on how best to proceed and how it will affect you. 

Can I Keep My House With Chapter 13 Bankruptcy? 

If you are not eligible for chapter 7 bankruptcy or would be unlikely to be able to keep your house by filing for chapter 7 bankruptcy, filing for chapter 13 bankruptcy is usually a better option. Under chapter 13 bankruptcy, the filer is required to have sufficient assets to enter into a repayment plan. In exchange for entering this monthly repayment plan, eligible debts will be discharged once the plan’s terms are completed. Depending on the terms of the plan, it will take three or five years in order to complete. 

Chapter 13 bankruptcy also has a provision that allows the filer to catch up on past mortgage payments by combining them with the other debts that are included in the repayment plan. However, in order for this to apply, the filer must be financially able to stay current with present payments and all payments moving forward. Chapter 13 bankruptcy may also provide filers with a way to keep their home even if they cannot protect the debt. In most cases, it is possible to keep your home when filing for chapter 13 bankruptcy, and at the very least, it gives you the best chance of being able to do so. 

If you are concerned about keeping your home but are overwhelmed by debt, it is a good idea to take action sooner, rather than later, before the debt gets worse. Talk to a bankruptcy attorney and a financial planner in order to put plans in place to regain control of your life and financial situation. 

How a Lawyer Can Help 

Bankruptcy can be a highly complicated process. It is also very high stakes. When a petitioner files for chapter 7 bankruptcy, they must also apply for a homestead exemption and include all assets that they deem as exempt and necessary to maintain a home and job. If mistakes are made in submitting that application, it can result in an inability to claim your home as exempt and it will be able to be liquidated by the bankruptcy court in order to repay debts. In other words, a single mistake can cost you your home. 

Without the assistance of a lawyer, you may not even know to ask for the homestead exemption or what exemptions are. Because bankruptcy does not apply to all debts, such as secured debts and student loan payments, your lawyer can also ensure that all aspects of your financial life can be resolved to the satisfaction of the law. It’s not possible to know what you don’t know, and a lawyer can make sure that you are fully informed with regard to all aspects of your bankruptcy proceeding and how to get the most out of the process. 

Contact the Bankruptcy Law Center 

If you are in over your head financially and believe bankruptcy may be a good option for you, talking to an experienced attorney at the Bankruptcy Law Center can allow you to learn whether you will be able to keep your home and how bankruptcy will affect you. Contact the Bankruptcy Law Center today and schedule a consultation.