Bankruptcy allows individuals who can’t pay their debts to find a manageable payment plan or eliminate some or all of their debts by liquidating their assets. Filing a bankruptcy claim can be complicated, however. What if you have a house? Does filing a claim in bankruptcy court mean you will lose your home?
A simple answer is not necessarily. If your home mortgage payments are up to date, declaring bankruptcy may help you keep your home. Bankruptcy can reduce or eliminate the other debts that could prevent you from making your mortgage payments.
This post will examine how a bankruptcy claim can affect your house and what you need to do to keep your home. We’ll also look at the specific circumstances around exemption amounts and which approach you should take depending on your circumstances. Talking with a bankruptcy lawyer near me can help you understand your area’s bankruptcy process and laws.
What are bankruptcy exemptions?
Bankruptcy exemptions allow you to keep some of your assets when you file a bankruptcy claim. The amounts vary depending on each state. Essentially, the bankruptcy court wants to make sure you have enough to start and rebuild your life again. You can keep things in your possession, such as an affordable car, professional tools, and your house if the amount of equity you have in it is less than the exemption amount.
Most types of property have specific exemption amounts, so if you have an expensive car worth more than the exemption amount, you may be unable to keep it. You may, however, be able to hold on to an inexpensive older one. A bankruptcy lawyer can help you understand the exemptions in your state and the requirements you need to meet in each category.
How does personal bankruptcy work?
If you choose to file a bankruptcy claim, you can do it under Chapter 7 or Chapter 13. Suppose you decided to file for bankruptcy under Chapter 7. In that case, you’re claiming to the bankruptcy court that you can’t pay your debts and want to have them eliminated. A bankruptcy court will do this by selling off your non-exempt assets to pay off a portion of the debts.
In Chapter 13, you may be able to keep your home and your assets. Rather than liquidate, the bankruptcy court can reorganize your debts and devise a more manageable repayment plan.
How does bankruptcy affect my home?
First, it’s essential to understand the exemption laws in your state to know what assets you can protect. We recommend speaking with a nearby bankruptcy lawyer to find out what the requirements and exceptions are for your state.
Say you live in a state with an exemption amount of $100,000 for a house. If your mortgage payments are up to date and you have $75,000 in equity in your house, you could possibly keep your home. This is because the value is under the exemption amount. If, however, you have $130,000 in equity in your home, you wouldn’t be able to keep the property as it is more than the exemption amount.
If you file a claim under Chapter 13 bankruptcy, as long as you make your payments on time, you won’t lose your home. In this case, the exemption amounts would help reduce the payments needed to repay your debts.
How do I find a bankruptcy lawyer near me?
LegalASAP can help if you have questions about what happens to your home if you file a bankruptcy claim. If you want to speak with a bankruptcy attorney near me, take our free evaluation to see if you qualify. Our network of local, experienced, and reliable bankruptcy lawyers can review your bankruptcy claim. They can help you understand your next move. Contact us today.