Will I Lose My House If I Declare Personal Bankruptcy
In many cases, you can file for bankruptcy and still keep your home. You are usually allowed to keep property that you need, such as a place to live. The amount of equity you have in your home will be a determining factor in whether youll be able to keep it.
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.
Asset Conversion That Could Be Considered Fraud
Converting nonexempt assets into exempt property in bad faith or with the intent to hinder or defraud your creditors can rise to the level of bankruptcy fraud. Each bankruptcy jurisdiction has its own opinion regarding the type of exemption planning that is permissible.
When analyzing whether your actions constitute fraud, courts consider:
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How To Improve Your Chances
To get approved for a mortgage after bankruptcy, you need to demonstrate to lenders that you can manage your finances responsibly.
That will require establishing good credit habits and ensuring that youre not over-utilizing credit, says Puricelli.
To rebuild your credit more quickly, follow these tips provided by Graham:
- Pay all your bills on time and in full
- Check your credit score and three free credit reports often and dispute anything inaccurate
- Dont take on unsecured debt, like personal loans or credit cards, which will most likely come with high interest rates
- Get a secure line of credit or loan that is backed with a deposit you pay beforehand
Having a friend or relative co-sign on new credit lines can also help you qualify more easily and start building new credit.
But this strategy comes with a lot of risk, because the co-signer is agreeing to take over your new debts if you cant pay them. And if the loan goes bad, their credit will take a hit, too.
Which Types Of Debt Are Not Subject To The Statute Of Limitations
Under the Ontario Limitations Act, the statute of limitations on most debts expires after two years from the date the account originally became delinquent. However, some amounts you owe are not subject to the statute of limitations, including:
- Government-guaranteed student loans
- Court-ordered debts, such as child support and fines
Its important to note that you cannot discharge some of these debts during bankruptcy. For example, court-ordered obligations are not typically eligible for discharge. You can discharge tax debt unless the Canada Revenue Agency placed a lien on your property. Finally, you can only discharge student loans if more than seven years have passed since you were a student.
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Chapter 13 Bankruptcy In Pennsylvania
You can also file under Chapter 13 bankruptcy to be put on a wage earners plan. Through this process, debtors have the opportunity to devise a 3-to-5-year repayment plan with their creditors. Debtors must make sure to comply with all terms included in the repayment plan in order to have their debt discharged.
This chapter is usually best for bankruptcy filers who want to keep their house. Our Philadelphia bankruptcy lawyers can help explain why in a free legal consultation.
What Happens To My House In A Bankruptcy
If you own a house when you file for bankruptcy in Ontario, your bankruptcy trustee will help you evaluate your situation to see if you can, and should, keep your home in a bankruptcy. They will talk with your about:
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How Do I Apply For Bankruptcy In Canada
The first step in the application process is providing me with detailed information about your specific situation. We get this information by having you complete our initial assessment intake sheet. We call ours the Debt Relief Worksheet.
The Debt Relief Worksheet collects the information we need to do a proper initial assessment. The information collected includes:
You can .
Can You File For Bankruptcy And Keep Your House
A lot of people ask us the question, Can you file for bankruptcy and keep your house? The answer depends on how much equity you have in your home . Most of the time, we think of equity as how much of our house we own after our mortgage is subtracted. For example, if your home is valued at $250,000 and your mortgage is $200,000, then you have $50,000 of equity in your home.
The amount of equity a licensed insolvency trustee will work with when determining if you can go bankrupt and still keep your home or not, is a net equity calculation. They will take the value of your home, subtract what you owe, deduct all of the costs that would come with selling your home, and then use that net equity amount to determine where you stand.
If the net equity amount is above the provincial exemption maximum, you have the choice of either selling your home or buying back the amount above the exemption limit. If you can afford to buy back the excess amount, you pay it to your trustee in addition to any surplus income amount . Your buy back amount becomes part of your bankruptcy estate and it is eventually distributed to your creditors.
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Will I Lose My Assets If I File For Chapter 7
You may possibly lose some assets if you file for Chapter 7. In Florida, we have a very extensive homestead exemption, it’s unlimited, so your home is protected. However, in exchange, they very much limited the personal property in vehicle exemptions. If you do own a home, your personal property exemption is limited to $1000 per person, and your vehicle exemption is also limited to $1000 per person. If you have valuable assets you may want consider filing a chapter 13 instead, where all of your assets are protected and you get the opportunity to repay some of the debt to your creditors.
Bankruptcy is a tradeoff. In exchange for the court reducing or eliminating your debt, you agree to release some of your assets to repay the creditors. Those assets are examined under Florida law to see what you are allowed to keep and what you must relinquish. The overall goal being that the trustee, or the court-appointed manager of your case, will try to recoup as many of your assets as possible and use those assets to pay the creditors. Here are the basics regarding assets in a Chapter 7 bankruptcy:
Some other personal property is exempt and not counted against the $1,000 such as education and health savings accounts and prescription health aids, plus pension benefits, qualified tax exempt retirement accounts, or public benefits like Workers Compensation or Social Security.
Will I Lose My House If I File Bankruptcy In Canada
If you declare bankruptcy, there are various ways and conditions in bankruptcy that you will NOT lose your house.
Everybody who owns a house and also experiences financial issues is worried about losing their house. Losing your home is possibly among the most terrible concerns people with a huge debt load that is crushing them have. This is exactly how it functions if you file for personal bankruptcy in Ontario.
In Ontario, the provincial regulation that describes what is excluded from seizure is called the Execution Act, R.S.O. 1990, c. E.24. For a full checklist of all bankruptcy Ontario exemptions, please review my Brandons Blog, BANKRUPTCY IN ONTARIO CANADA SECRETS EXPOSED.
The exemption in Ontario for your house is $10,000 of equity. The present thinking is that if your equity is $10,000 or less, if you go bankrupt, then your entire equity is excluded from seizure by the Trustee. Nonetheless, if your equity is $10,001 or greater, your whole equity in your home is NOT exempt and also is readily available to your Trustee for the benefit of your creditors.
Keep in mind that we are talking about your equity. In determining your equity, we first have to determine the market value of the house. We then deduct any mortgages or other loans registered against the property. The net result of this calculation represents your equity. If you own the home jointly with your spouse, then it is half of that number that is your equity. The other half belongs to your spouse.
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Does Bankruptcy Discharge Mortgage Debt
The answer to this question really depends heavily on the type of bankruptcy being filed. Well go over the scenarios for Chapters 7 and 13 bankruptcies because these are the most common, but if you have any questions, please consult your bankruptcy attorney.
We referred to Chapter 7 above as the wipeout bankruptcy because youre relieved of your responsibility for the debt. However, if you want to keep your home and car, youll need to keep your mortgage and car loans. If you dont stay current on your payments, your mortgage lender can foreclose, and the car can be repossessed.
Chapter 13 bankruptcies are about reorganization, so you can use this type of bankruptcy to pay back debts according to the timeline in your plan while staying current on any mortgage payments after the bankruptcy is filed. Unlike Chapter 7, under Chapter 13 bankruptcy, youre still responsible for the debt.
Show You Have Sufficient Income
Using the Chapter 13 plan to catch up on your arrearages will only work if you have the income to make both your regular monthly mortgage payment and your plan payment while you’re in bankruptcy.
Once you’re in Chapter 13, the mortgage holder can’t foreclose if you’re paying your house and plan payments on time and keeping to your mortgage terms, like ensuring that you have homeowners insurance in place.
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How Much Does It Cost To File Bankruptcy In Canada
The expense of declaring bankruptcy is something you will certainly need to take into consideration. Just how much you will need to pay to go bankrupt relies on a number of variables, including:
- your month-to-month income
- the size of your family members and also
- whether you have ever been bankrupt in the past.
You are required to your surplus income into your estate every month. Surplus income is defined by the federal government. If your household makes over a certain amount every month, you pay a component of your earnings over that base set by the government each year. That base is essentially the poverty line.
The surplus income computation is reasonably complicated. I recommend you bring your current pay stubs to your meeting with me to make sure that I can accurately estimate it for you.
The fee a Trustee is entitled to charge in an ordinary personal bankruptcy must be approved by the Court. In a bankruptcy where there really are no assets, the fee is set in the statute.
If you have non-exempt assets, the Trustee sells them and receives the proceeds of the sale. If you have surplus income to pay, the Trustee collects those payments from you. The Trustees fee, which is the cost of the bankruptcy, comes from the money collected by the Trustee. So, in this example, where the Trustee has collected more than the cost of the bankruptcy approved by the Court, there is no additional cost to you at all. In this way, the Trustee is free!
Exemptions For Your Home
In British Columbia, homeowners exemptions are higher if you live in Vancouver or Victoria. In this case, $12,000 of the equity in your home is protected in Greater Vancouver and the Victoria capital area. Elsewhere in the province, $9,000 in home equity is exempt from bankruptcy. For more information on bankruptcy exemptions in British Columbia, you can request a call from a local Licensed Insolvency Trustee.
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When You File Chapter 7
Chapter 7 is also called liquidation bankruptcy. The bankruptcy trustee handling your case is obligated to sell off any non-exempt assets to pay off creditors. This is why determining the non-exempt equity in your home is important. Where you stand on your mortgage payments is also a consideration. If you are current on your payments, you are more likely to keep your home. If you are not, you are more likely to lose it. If you fall 90 days or more behind on your mortgage, the lender can foreclose. Even with the automatic stay associated with filing for bankruptcy, if you are not able to cure the amount you owe on the mortgage, you can lose the home.
Do You Owe Money On Your House Or Your Car
Home mortgage loans and car loans are secured debts, which means they are debts secured by collateral. When you borrowed the money, you pledged the property as security for the loan. If you do not pay the debt, the creditor can take the property.
If you file a Chapter 7 case and owe money on your house or car, you can keep the house or car if you agree to repay the underlying loans, and:
- The monthly payment is reasonable
- The property is necessary to support yourself and your dependents
- You are current on the payments and
- You can afford the payments and still support yourself and your family.
If you are behind on your house or car and file Chapter 7, you can use the bankruptcy as a chance to walk away from the debt and start over, which may be the best choice for someone who cannot afford to pay back such loans. Chapter 13 is also an option to save your house or your car if you are behind on payments contact Jenkins & Clayman to find out more.
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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:
What Debts Cannot Be Discharged In Bankruptcy
The following debts cannot be discharged in either a Chapter 7 or a Chapter 13 bankruptcy case. If you file Chapter 7, you will still owe these debts after your case is over. If you file Chapter 13, these debts will either be paid in full during your plan, or the balance will remain at the end of your case.
Nondischargeable debts include:
- Unlisted debts, unless the creditor had knowledge of your bankruptcy filing.
- Recent income tax debt and other tax debt.
- Fines imposed for violating the law.
- Student loans, unless you can show that it will cause a hardship for you to repay them.
- Debts you owe under a divorce decree or settlement.
In a Chapter 7 and 13 case, a creditor may object, and a judge may agree, to theseadditional debts being discharged:
- Debts incurred by embezzlement, fraud, or larceny.
- Certain credit purchases made within 90 days or cash advances made within 70 days of filing.
- Restitution or damages awarded in a civil action for willful or malicious injury to a person.
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Lottery Winnings Or Inheritances
If you win the lottery or receive an inheritance after youve filed, but before youve been discharged from bankruptcy, that money must be given to the LIT, who will distribute it to your creditors. If the amount youve received is greater than the debts you owed, you can keep whats left after your creditors have been paid off.