Filing for bankruptcy is a huge financial decision, and not one to make lightly. Many people fear that bankruptcy will cause them to lose everything, especially their homes and cars.
While filing for bankruptcy can mean losing some assets, there are some ways you can keep your home. If keeping your home after bankruptcy is a priority, consider these key questions.
Are you current on your mortgage payments?
If you’ve prioritized keeping your mortgage payments current even while struggling with debt, you can file for either Chapter 7 or Chapter 13 bankruptcy. If, on the other hand, paying the mortgage has become impossible due to your current debt, you may be able to keep your home if you file for Chapter 13 bankruptcy, but not necessarily Chapter 7. You will need to bring your mortgage payments up to date before filing for Chapter 7 bankruptcy if you want to keep your home.
Can you afford your home?
Take a look at what you’re paying to keep up with your home before filing for bankruptcy. In some cases, you may find that the cost of homeownership has risen significantly higher than you originally planned, or that your income has not met your expenses as well as you had hoped. If you discover that you cannot afford your mortgage and the other payments that go along with owning your home, you may want to go ahead and let the home go, whether you choose to sell it or include it in bankruptcy proceedings. Keep in mind that if you file for Chapter 13 bankruptcy, you will need to show that you can continue to make updated payments on your home while also discharging your debts according to your repayment plan.
How much equity do you have in the home?
Depending on how you file for bankruptcy, the amount of equity you have built up in your home can make a big difference. You can usually choose to exempt a certain amount of your assets when filing for Chapter 13 bankruptcy. If the equity in your home exceeds that amount, you will have to balance your bankruptcy plan so that you are paying the excess amount to your creditors over the course of your bankruptcy plan. If you have relatively minimal equity on your home, it can be easier to keep it when you file for bankruptcy. On the other hand, if you have substantial equity in your home, it may be more important to you to protect as much of that equity as possible.
Do you need a bankruptcy attorney?
Are you planning to file for bankruptcy? If you want to prioritize keeping your home, working with an experienced bankruptcy attorney can help make that easier. The bankruptcy process is rarely simple, and an experienced bankruptcy attorney can ensure your best interests are protected through every stage of the process.