Filing Chapter 13 To Save Your Home
If you are behind in your mortgage payments, Chapter 7 will not work, unless you wish to surrender the home or pursue a loan modification. But you can avoid or stop foreclosure by filing a Chapter 13 and proposing a plan to catch up your payment arrearage. However, to do so you must have disposable income that will fund a repayment plan.
Your Options To Keep Your Home
If after a complete analysis you decide that you do want to keep your home and there is positive equity in your house, the final question is whether or not you can afford to pay the trustee the value of your home. The trustee will negotiate with you to determine the equity in your home, and you will be required to pay that amount in order to keep your house if you file for bankruptcy.
You should discuss the equity in your home and the required repayment terms with your trustee before you file your assignment in bankruptcy. Your creditors may object and require that you pay more, so it is important to understand the process before you file.
If there is significant equity in your house, or if you are unable to raise the amount of money required to purchase the equity in your house, you may want to consider a consumer proposal. In a consumer proposal you would still pay the equity in the house, but the payments can be structured over a longer period of time, making the process more affordable each month for you.
Your house is your most important investment, and your largest monthly expense, so it is essential that you contact a Licensed Ontario Bankruptcy Trustee to review your housing situation before you decide whether or not bankruptcy is the correct option for you and your family.
Is Chapter 7 Bankruptcy Right For You
If youre drowning in debt and dont know where to turn, bankruptcy might be your best option. Most debtors have no nonexempt property, which means that they pay nothing to unsecured creditors and their debts are discharged. If youre considering filing for bankruptcy or just looking for options to deal with your debt, check out our other blog posts or reach out to an experienced National Bankruptcy Forum member attorney.
Keeping Your Payments Current
Under Canadian bankruptcy law a secured lender, like a mortgage holder, is not permitted to cancel their loan simply because you have declared bankruptcy. If you are up to date with your payments, you can continue to pay your mortgage, even while you are bankrupt.
However, if you are in arrears or , the mortgage holder is not required to allow you to continue with the mortgage. Even if you are not bankrupt, if you are in arrears the mortgage lender can start foreclosure proceedings and sell your house.
Can A Bankruptcy Trustee Take My Home
Itâs not common, but itâs possible in certain circumstances.
The bankruptcy trusteeâs job is to sell non-exempt property for the benefit of unsecured creditors. That includes personal property and real property. Whether your home is safe from the trustee depends on whether it has any ânonexempt equityâ which in turn depends on its market value.
As a reminder, hereâs how we calculate equity in this scenario:
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Bankruptcy Exemptions In Chapters 7 And 13
Exemptions work differently in Chapters 7 and 13. In Chapter 7 bankruptcy, you lose property not covered by an exemption. The bankruptcy trustee responsible for managing your case will sell the property for the benefit of your creditors.
In Chapter 13 bankruptcy, you can keep all of your property however, that luxury comes at a priceliterally. You’ll pay your creditors the value of any property not covered by an exemption in your Chapter 13 repayment plan.
For example, say you own a car outright worth $3,000, and your state has a vehicle exemption of up to $5,000. Here’s what would happen in each chapter.
- Chapter 7 Bankruptcy. If you file for Chapter 7 bankruptcy, you will get to keep your car because the exemption would protect the equity fully. In the same example, if your vehicle were worth $15,000, the bankruptcy trustee would sell your car, pay you $5,000 for the exemption, and distribute the rest to your unsecured creditors.
- Chapter 13 Bankruptcy. In Chapter 13, you wouldn’t need to pay extra to your creditors through your repayment plan. However, if the car were worth $15,000, you’d need to pay your creditors at least $10,000 through your plan.
Keep in mind that these examples don’t take into account a vehicle loan. For more information, read How to File Bankruptcy Without Losing a Car.
Waiting Periods For Other Bankruptcies
While the legal implications behind debt discharge or dismissal outside of Chapters 7 and 13 bankruptcies are beyond the scope of this article, we can share the waiting periods for getting a new mortgage if youve filed Chapter 11 or 12 bankruptcies in the past.
For Chapter 11 bankruptcies, you can get a mortgage through the FHA or VA as long as you otherwise qualify and the bankruptcy was discharged or dismissed 2 years prior to application. The waiting period for conventional loans is 4 years and 7 years for jumbo loans.
For a Chapter 12 bankruptcy, conventional loan policy again differentiates between discharge and dismissal. If the bankruptcy is discharged, that has to have happened more than 2 years prior to application and it has to be filed more than 4 years ago. When the bankruptcy is dismissed, the waiting period is 4 years.
With an FHA loan, the bankruptcy only needs to be discharged or dismissed before you apply. Meanwhile, the VA has a 3-year waiting period prior to application.
Filing for bankruptcy is a big decision that has a lot of implications for your current and future financing. Make sure you discuss your options with a lawyer or your financial advisor before you stop making payments or file for bankruptcy.
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Find Out What Happens To Your Home In Chapter 7 And Chapter 13 Bankruptcy
Updated By Cara O’Neill, Attorney
Many people considering filing for bankruptcy worry about losing their homes. Some may be facing foreclosure others might be managing their mortgage just fine but don’t want to lose their home in bankruptcy.
The automatic stay will stop creditors and give all filers temporary breathing room, but whether you’ll be able to keep your home will depend on your situation, your state’s homestead exemption, and the chapter you file.
- Chapter 7 bankruptcy doesn’t have a mechanism to help filers who’ve fallen behind on payments. You must be able to exempt all of your equity and remain caught up on your mortgage payment.
- Chapter 13 bankruptcy can save a home from foreclosure. You must have enough income to pay missed payments, any portion of equity that you can’t exempt, and all other required amounts over three to five years.
Learn about the differences between Chapters 7 and 13.
Can You File Bankruptcy And Keep Your House In 2021
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In a Nutshell
Filing bankruptcy and keeping your house is possible. Whether you can file bankruptcy and keep your house depends on your unique circumstances. Hereâs what you need to know.
Written by Attorney Andrea Wimmer.
Homeownership has long been part of the âAmerican Dream.â If youâre overwhelmed with debt, donât let your fear about losing your home stop you from getting bankruptcy relief. Especially if paying your creditors is putting your ability to pay your home mortgage at risk.
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Can I File Bankruptcy And Keep My House And Car
You calculate the net equity in your home by subtracting your mortgage payoff and the total of other valid liens filed against the house title from the current fair market value of the home.
For example, if your home is worth $100,000 and you owe $80,000 on your mortgage, the net equity in your home equals $20,000. However, if you apply the federal bankruptcy exemption for homes of $25,150, your homes equity is protected from unsecured creditors if you file for bankruptcy relief. Remember, for married couples, the homestead exemption doubles if both debtors are on the title to the home and file a joint bankruptcy petition.
Your bankruptcy attorney carefully analyzes your property against the available bankruptcy exemptions before you file for Chapter 7 or Chapter 13. If there is a risk that you could lose property by filing bankruptcy, your attorney discusses the risk with you so that you can make an informed decision on how to proceed. In some cases, you might have alternatives to filing bankruptcy to get rid of debt.
So if you are a senior and looking to file bankruptcy, you may have some additional things to help keep your home. For example, retirement income is generally untouchable in bankruptcy, and many retirees can avoid losing their homes by using the homestead exemption.
Protecting Your Home In Chapter 7 Bankruptcy
The Chapter 7 bankruptcy trustee will sell your nonexempt assets and distribute the proceeds to creditors in exchange for wiping out qualifying debt. Luckily, bankruptcy law protects some of your property from the reach of the creditor through bankruptcy exemptions. If the equity in your property is entirely exempt, the trustee can’t take it. To determine how much equity you have in your home, subtract all mortgages and liens from your home’s current market value.
The federal bankruptcy exemptions, and most state exemptions, provide debtors with a homestead exemption, which protects at least some of the equity in your primary residence. State homestead exemption amounts vary greatly.
Chapter 7 bankruptcy does not provide a way for filers to make up mortgage arrears. Unless you can work something out with the lender, you will eventually lose your home, despite your bankruptcy filing. For more detail, see Can I Keep My Home in Chapter 7 Bankruptcy?
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Bankruptcy Law Firm In Tampa
If you are struggling with debt Florida law advisers may be able to help get a fresh start. Regardless if you need help with Chapter 13 or Chapter 7, we provide legal advice you can trust. We are dedicated to providing effective representation, individualized attention, and affordable fees to our clients. All of our initial consultations are free and convenient payment plans are always available. Call us now at 800 990 7763 to speak with a Tampa bankruptcy lawyer.
I’m In Over My Head With Debt And I Just Lost My Job Should I File For Chapter 7 Bankruptcy
If you think you’ll incur significant debts soon, it might make sense to wait to file for Chapter 7 bankruptcy. Although your current debts will be discharged in your bankruptcy, debts incurred after you file for bankruptcy won’t be. Because you can’t file for bankruptcy for eight years after the filing date in a previous Chapter 7 discharge, you’ll be on the hook for those debts for a long time. To learn about other situations in which it makes sense to delay your bankruptcy filing, see Should I File Bankruptcy Now or Wait?
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Northwest Territories / Nunavut / Yukon Exempt Property
The above exemptions for the territories do not apply if:
- You are behind on child or spousal support payments.
- You have absconded or are about to abscond from the territories, leaving no spouse or family behind.
A Licensed Insolvency Trustees is your trusted resource for current information on insolvency solutions, and factors that may affect your specific situation. Contact a Licensed Trustee today. Your first appointment is free, and your discussion is confidential.
Find a local trustee that you can rely on. We have trustees everywhere from British Columbia to Ontarioand more.
Can You Keep Your Car If You File For Bankruptcy
Most provincial regulations include an exemption for some or all of the value of your car, especially if it is needed for your occupation. If you are making payments on your car, retaining the car will depend partly on whether you can continue the payments. A Licensed Insolvency Trustee can explain how the regulations will apply to your specific situation.
Provincial exemptions for homes and cars can be confusing, especially when considering mortgages and leases. A Licensed Insolvency Trustee will gladly help you learn how these assets would be affected in a bankruptcy. Your conversation is confidential and you are under no obligation. Contact a Trustee today!
Bankruptcy Exemptions by Province and Territory
- The exemption lists we provide below are simplified summaries of the law
- Even where there is no dollar limit, exemptions are limited to what you and your dependants really need
- The provinces often adjust the exemptions for various reasons, such as inflation
For interpretation of the rules in your case, we strongly recommend that you contact a Licensed Insolvency Trustee to review your situation and determine which of your assets will be exempt if you file for bankruptcy. You should be completely clear on what you can keep if you go bankrupt in Canada, versus what you may lose.
Please choose your province or territory:
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Keeping Your House Or Car In A Chapter 13 Bankruptcy Case
Chapter 13 is a special type of bankruptcy. It is a repayment plan where you pay a small portion of your debt over a period of time. Typically, 36 months, but this going to run up to 60 months. One of the features of chapter 13 bankruptcy is the ability to catch up and make payments inside the plan period. So, for example, if you miss 10 mortgage payments you could make those up over 36 months.
Chapter 13 also allows you to cram down certain debts. It can make it possible to remove second mortgages on your house or make it so that you are only paying the actual value of your car as opposed to what you actually owe on the car
What Happens To My House If I File For Bankruptcy In Pennsylvania
Every year, thousands of Americans file for bankruptcy due to financial hardship. Many times, and due to no fault of their own, homeowners see themselves buried under excess debt, which makes it hard to meet their monthly obligations. People may have to choose between buying the weeks groceries and paying their mortgage. That is why many debtors turn to bankruptcy as a means to deal with their financial hardship. In some cases, bankruptcy might help you protect your house.
Generally, if you have This means your credit card debt is not secured by collateral, such as a house. Therefore, your credit card company cannot go against assets like your house right away when they try to collect on your debt. However, they may be able to obtain a judgment allowing them to go against some of your other assets to satisfy your debt. That usually helps keep your house from creditors but only for unsecured debt.
Things can be very different when you have secured debt. Unlike unsecured debt, your mortgage is secured by collateral. In other words, the bank is specifically authorized to go after your house if you dont pay your mortgage. Banks will often enforce that right to go against your house regardless of your financial situation. One of the ways your mortgagor will do this is through mortgage foreclosure in Pennsylvania.
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Can I Keep My Car If I File Chapter 7 Bankruptcy
You can generally keep your car if you file chapter 7 if the equity in the vehicle is below the exemption amount. If the vehicle is subject to a lien, the contractual payments will need to be maintained directly to the lienholder. For debtors using North Carolina exemptions, it allows an exemption in a motor vehicle of $3,500.00 so long as the vehicle was purchased more than 90 days prior to the bankruptcy filing.
Further, a debtor using North Carolina exemption laws is entitled to a $5,000.00 wildcard exemption which can be stacked on other exemptions or used independently. It may be possible to assert a $2,000 tools of trade exemption on a motor vehicle under the North Carolina exemption law if the facts support it. Married couples filing together are each entitled to an exemption.
If you are still making payments on a vehicle loan, there will be a lien that protects the lender and so if you want to keep your car in a Chapter 7 bankruptcy, you will need to make regular contractual payments on the loan.