One of the most significant stressors many face when considering bankruptcy is whether they will keep their home if they file. While it may be possible to keep you home, there will be several factors to consider, and one of the most important will be your specific situation and the type of bankruptcy filing you choose. While filing for bankruptcy may allow you to keep your home, it will be necessary to carefully think over whether you will be able to afford it moving forward. In some cases, it may be in your best interest to make alternate living arrangements if your income will not allow you to make the mortgage payments for your home. When filing for bankruptcy, debtors will have specific needs. Because of this, you will want to make every effort to ensure a process that keeps your interests at the forefront, which is a primary reason to contact an experienced bankruptcy lawyer for guidance.
Keeping Your Home with Chapter 7
Chapter 7 provides debtors with a clean slate and may be a viable option if you can pass the means test. If you are current on your mortgage payments and do not have a significant amount of equity in your home, it may be possible to keep it in your possession. However, be aware that if you have substantial equity in your home or is being foreclosed on, Chapter 7 may not be the most viable option. To sort this out, you will need to determine how much equity is in your home by taking your home’s value and subtracting what you owe. Each state has a homestead exemption that allows you to keep a certain amount of equity. If your equity is greater than the exemption allotted, the bankruptcy trustee will likely sell your house and use the funds left over to pay your creditors.
Keeping Your Home with Chapter 13
Chapter 13 is also known as a wage earner’s plan and involves the debtor developing a repayment plan and paying off some of their debts over a 3-5 year span. When it comes to keeping your home, Chapter 13 may provide more flexibility and may be appropriate if you are behind on your mortgage payments. This is because, within your repayment plan, you can include mortgage arrears. In many cases, Chapter 13 is the most appropriate option for keeping your home. Still, it will be vital that you are able to afford the mortgage payments and cover the nonexempt portion of your property within your repayment plan.
Can You Afford Your Home?
No matter the type of bankruptcy filing you choose, it’s critical that you think carefully over whether you can afford to keep your home. In some cases, a person may cover their mortgage once their other debts have been settled. However, if your income is not enough to continue making your mortgage payments, keeping your home may not be a viable option. The last thing any person wants is to find themselves in foreclosure because they cannot afford their mortgage payments.
Contacting a Bankruptcy Lawyer
Choosing to file for bankruptcy likely wasn’t an easy decision to make. The process can result in a rollercoaster of emotions. While you may ultimately be experiencing relief, there may be some sense of anxiety over what the outcome may be. Many families filing for bankruptcy want to keep their home, and, in some cases, this may be an option. To ensure that you give yourself every opportunity to get your needs met and resolve your bankruptcy promptly, contact a lawyer, like a Chapter 7 bankruptcy lawyer in your area for support.