If You Have Multiple Mortgage Loans
Under Chapter 13, a borrower who has multiple mortgage loan on the same house can get all but the primary categorized as unsecured debt. That means they go into the category thats covered by your ability to pay, and likely wont have to be paid back in full. This only comes into play if you owe more on the house than its worth.
Common Reasons People File Chapter 7 Bankruptcy
Most people try to avoid bankruptcy and consider it a last resort, but under the right circumstances, it can be a lifesaver. No one wants to find themselves in debt, but chapter 7 can erase what you owe and give you a clean start. Here are four of the most common reasons that people file chapter 7 bankruptcy.
Debts Never Discharged In Bankruptcy
While the goal of both Chapter 7 and Chapter 13 bankruptcy is to put your debts behind you so that you can move on with your life, not all debts are eligible for discharge.
The U.S. Bankruptcy Code lists 19 different categories of debts that cannot be discharged in Chapter 7, Chapter 13, or Chapter 12 . While the specifics vary somewhat among the different chapters, the most common examples of non-dischargeable debts are:
- Alimony and child support.
- Certain unpaid taxes, such as tax liens. However, some federal, state, and local taxes may be eligible for discharge if they date back several years.
- Debts for willful and malicious injury to another person or property. âWillful and maliciousâ here means deliberate and without just cause. In Chapter 13 bankruptcy, this applies only to injury to people debts for property damage may be discharged.
- Debts for death or personal injury caused by the debtorâs operation of a motor vehicle while intoxicated from alcohol or impaired by other substances.
- Debts that you failed to list in your bankruptcy filing.
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What If Im Behind On My Mortgage
If youâre behind on your mortgage payment and â¡ï¸
you donât want to keep the house: Chapter 7 provides a mechanism to surrender the house to the bank and discharge your obligation to pay the loan. This will protect you if your mortgage loan is a ârecourseâ loan where the bank could otherwise try to collect a deficiency judgment after the foreclosure.
you do want to keep the house: Chapter 7 is not ideal. It doesnât provide a mechanism to catch up on your mortgage payments. This means youâre still at the mercy of the bank and their willingness to modify your home loan to deal with your arrearage. If you can afford to make your full mortgage payments now, Chapter 13 bankruptcy may offer a solution.
What If I Have Too Much Equity In My House
You still have options. The amount of equity above the exemption is in question. You also have other options. To help people understand this scenario and the scenario when equity is below the limit, we built the following debt relief options comparison calculator to help you understand the different options, costs of those options, and pros and cons.
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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.
Speak With A Bankruptcy Lawyer Today
If you are facing foreclosure or would like to consider bankruptcy for another reason, we are here to help. Our clients who own real estate are able to file bankruptcy every day while keeping their homes. We can show you how. If you would like a consultation you can call 704.749.7747 to speak with an attorney today. Or you can All consultations are free and can be done over the phone. We know you have choices. We hope you choose Layton Law.
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Can I Keep My House If I Declare Bankruptcy
If you can continue to make your mortgage payments, you may be able to keep your home. Additionally, if your home equity falls within the exemption limits in your province, then your trustee will disclaim any rights to it.
Your home equity is determined by removing what you owe for the assetthe mortgage and property taxes. If that amount is over the exemption limit, you may be required to pay that value in order to keep your home.
Sometimes, if the home equity amount exceeds the exemption amount considerably, homeowners will consider using this to pay off creditors. That is why it is important to learn about the asset exemption limits that apply to your province.
Can I Keep My Home After Filing Bankruptcy
The answer, like so many others in law, is that “it depends.” Most people that declare bankruptcy can keep their houses throughout the process, but some are not.
Keeping your home is often the biggest worry about filing for bankruptcy â and which Chapter to file for. This article will give you some useful information so you can know what to expect.
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In Indiana What Property Can I Keep
In a chapter 7 case, you can keep all property which the law says is exempt from the claims of creditors. Indiana exemptions provides a list of the exemptions available for Indiana. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didnt file bankruptcy.
When The Trustee Abandons Property
In Chapter 7, the Chapter 7 trustee cannot take any exempt property. However, if you have nonexempt property, the trustee can sell it and use the proceeds to repay your unsecured creditors. Sometimes the trustee decides that it’s not worth seizing and selling your nonexempt property. In that case, the trustee may “abandon” the property.
The trustee will abandon property in several situations. Here are a few.
The Property is Upside-Down
Secured property is “upside-down” when the value of the loan secured by the property is more than the market value of the property. Car owners are often upside-down on their car loans. For example, a debtor takes out a five-year loan of $25,000 to buy a brand new Toyota, but due to losing her job the debtor must file for bankruptcy two years later. The debtor still owes $20,000 on the Toyota, but the market value is only $15,000. The debtor is now upside-down on the car loan.
In the example above, the trustee will likely abandon the car. Once the secured creditor is paid, there will be no additional funds with which the trustee can pay unsecured creditors. Therefore, it is not worth the trustee’s time or expense to liquidate that car.
Costs of Sale and the Trustee’s Commission
- surrender the property to the creditor
- redeem the property by paying the creditor the market value of the property
- reaffirm the debt , or
- keep the property without reaffirming the debt.
Learn more about keeping a car in bankruptcy.
Qualifying For State Exemptions
The state you file for bankruptcy in is usually determined by the state you have lived in for the past two years.
If you haven’t lived in any state for at least two years, however, your place of âresidenceâ will likely be the place where you spent the majority of your time for the six months leading up to two years ago.
Hereâs an example: Say you have been living in Arkansas for the past year and a half. Before living in Arkansas, you lived exclusively in Texas for 4 years. Because you haven’t been living in Arkansas for the required two years, you will be counted as a Texas resident.
This means that you will choose between Texas’ Chapter 7 bankruptcy exemptions or the federal bankruptcy exemptions.
If You Owe Money To People Or Companies In The Eu
If you owe money to people or companies in the EU, your creditors wont be able to take your home if its in the UK.
If you live in the UK but have a home in the EU with a mortgage from an EU lender, the lender could take you to court in the EU.
Get legal advice if you have creditors in the EU. Find free or affordable legal help.
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What If I Dont Want To Keep My House
Of course, not everyone sees their home as a benefit.
If youd rather get rid of it and find another place to live, then you can.
This choice is up to you, in most scenarios, you can keep your home unless you dont want it.
Need help with bankruptcy?
If so, then you need the help of a Licensed Insolvency Trustee.
Contact us now, and we will arrange an appointment to go through your financial situation in great depth.
Our team will help you figure out if bankruptcy is the right path, and how to retain your home if you choose to file for it.
Which Of My Debts Are Not Discharged In Chapter 7
While a discharge relives you of your obligations to pay most of your debts, not all debts are dischargeable in a Chapter 7 bankruptcy. Nondischargeable debts include, for example, alimony and child support obligations, certain taxes and fines, certain education loans, debts for death or personal injury caused by the debtor’s operation of a vehicle while intoxicated from alcohol or other substances, and debts you fail to disclose properly to the bankruptcy court when filing your petition. Some debts that are typically dischargeable can be excluded from discharge if the specific creditor requests that the bankruptcy court declare the debt nondischargeable. These debts include debts for money or property obtained by false pretenses and debts for willful and malicious injury by the debtor to another entity or to the property of another entity. If the bankruptcy judge grants the creditor’s request, the debt owed to that creditor will not be discharged.
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Keep Track Of Your Credit During The Process
Bankruptcy can harm your credit history and your ability to do certain activities in the future. Therefore, its important to track your credit scores throughout the process and while you work to recover.
You should also keep track of how different activities affect your credit scores. Also, be alert for potential mistakes and bad information that could harm your score. You can dispute any information on your credit reports that you find to be incorrect.
If you keep track of your credit scores throughout bankruptcy, youll be able to learn more about ways to improve them over time.
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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.
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If I File Bankruptcy How Will It Affect My Future Credit And My Job
Different people have different experiences obtaining credit after they file for bankruptcy. As a general rule, most people find it more difficult to obtain long-term credit, such as a home mortgage, shortly after a bankruptcy has been filed. For other types of credit, however, experiences vary depending on other factors. The Bankruptcy Code prohibits your employer from discharging you or discriminating against you solely because you have filed a bankruptcy case. A bankruptcy can remain on your credit report for up to 10 years, but many people are able to raise their credit score to a relatively good level within a few years after bankruptcy.
Bankruptcy Exemptions: What Property Can You Keep In Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, almost all of your property becomes property of the bankruptcy estate. That doesn’t mean you lose everything. The purpose of bankruptcy is to provide people with a fresh startand part of that fresh start is keeping the things you need to hold down a household and job. Bankruptcy exemptions allow you to keep the things you’ll need to work and live, such as furniture, dishes, clothing, and a car.
How much property you can exempt differs depending on which state you live in because each state has a set of exemption laws .
Example. If you own a car worth $5,000 and your state allows a $6,000 car exemption, then you can keep your vehicle. However, if you live in a state that only allows a $2,000 car exemption , then the bankruptcy trustee may take your car and sell it. From the proceeds of the sale, the trustee will pay you the exemption amount of $2,000 and distribute the rest among your creditors.
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Will My Mortgage Be Impacted By Declaring Bankruptcy
If your mortgage payments are up-to-date and you want to continue with the mortgage in place, your mortgage will not typically be impacted by declaring bankruptcy. In most bankruptcies there are two types of debts unsecured debts and secured debts . Whether a debt is unsecured or secured can change how it is dealt with under a bankruptcy:
Unsecured Debts: These types of debts do not hold any assets as collateral, so the creditor does not have any additional power. Unsecured debts are written-off through a bankruptcy.
Secured Debts: Creditors who have a secured debt hold an asset as collateral, meaning they have a registered lien or charge on property. In this situation, you have a few choices. You could choose to carry on with the credit arrangements in place try to negotiate new terms or choose to walk away from the asset altogether and let the secured creditor have the asset.
Ways To Save Your Home Before Bankruptcy
If you worry about having to apply for bankruptcy, there are a few things you can do to avoid ever reaching this point.
- Selling your interest to the co-owner, a family member, or a friend
- Negotiating settlements or paying by installments if the available funds arent sufficient to meet your debts in full.
One important note is that if you decide to sell your property to a co-owner, family member, or friend, be safe that they are paying you a fair market price for what the property is actually worth.
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Can I Keep My Car If I Declare Bankruptcy
If you can continue to make loan payments during your bankruptcy, you may be able to keep your vehicle. Your bankruptcy does not prevent your car from being repossessed if you are not able to make payments. If you are the owner of a motor vehicle that exceeds the exemption limit outlined by your province, there is a buy-back option. With your trustee, you can arrange to pay on the amount that exceeds the exemption limit.
What Are Chapter 7 Bankruptcy Exemptions
The purpose of bankruptcy is to help people get back on their feet and regain control of their financial situation. In order to help with this process, the government created a set of exemptions to help individuals maintain their quality of life, while still resolving their issues with creditors.
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Do You Get To Keep Your House If You File For Bankruptcy
If you kept your house throughout the bankruptcy process, you are free to keep your home after the bankruptcy as long as you continue to pay the mortgage. It may be that after you are free of all the rest of your debt you will be able to afford the mortgage payments easily. If so, youll be able to keep your house.