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How to Keep Your House During Bankruptcy?

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Declaring bankruptcy when one isn’t unable to pay off outstanding debts can be a grueling process to go through. The most pressing question that comes to mind is whether they can keep their homes.

Of course, but not all the time. You can retain your house even if you’ve bankruptcy, provided that you qualify for the provisions. To avoid losing your home, you will need to start by finding out if it will be possible to protect all the home equity. 

This post helps you better answer: how can I file for bankruptcy and keep my house?  It provides an idea of the requirements you have to meet and the specific chapter you have to file.

Keeping Your Home

In a bankruptcy proceeding, the court determines how the person should settle his debts as much as possible based on the available assets.   This can delay the foreclosure process and save your property.

This depends on the following factors:

  1. The type of bankruptcy you’re filing
  2. Status of mortgage payments at the time of filing
  3. The property’s equity value
  4. Length of time to rebuild your credit
  5. The manner in handling your debts and assets

The good news is that there is assistance available for you to remain in your home. An expert bankruptcy lawyer will find ways on how to defend your property.

Choosing the Right Chapter for Your Bankruptcy

These chapters help you manage your debt, but each creates different consequences for your homeownership.

Chapter 7:

Regarded as “liquidation” bankruptcy allows a person to keep his property as long as one isn’t behind on mortgage payments and can continue to pay for it. It prevents creditors from seizing the property through the homestead exemption. However, your assets may be liquidated to repay your debts.

If a filer can’t meet the requirement, there is a high chance that the property will be seized.

If you file Chapter 7 bankruptcy, the factors below boost the likelihood that your home will be spared:

  • Most, or all, of your equity is safeguarded with an exemption
  • Your property is worth less than what you’ve borrowed for it.
  • You prove your ability to make mortgage payments on time.

Chapter 13:

Also called as “reorganization” or “wage earner’s” bankruptcy, this involves the debtor in arranging a three- to five-year repayment plan.  

The good thing about this filing is that it’s created to catch up on arrearages. As long as you make sufficient monthly payments to cover your mortgage and plan, the mortgage holder cannot foreclose your property.

Protecting your Assets

Bankruptcy should enable you to start over and provide some creditor protection. However, this can seriously damage your credit report for ten years or even more. In the end, it might also be quite costly since you’ll be charged for the attorney’s costs in addition to the filing expenses. You ought to only resort to bankruptcy once all other legal paths have been taken. But the thing is, you have a good shot at keeping your home if you file for bankruptcy, provided that you’ve taken all the needed considerations. 

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