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Can You Keep Your House If You File Bankruptcy

Making A Reaffirmation Agreement To Keep Your Car

Bankrupcty Can You Keep Your House?

Another way to keep your car when filing for bankruptcy is to reaffirm the debt, which means agreeing to a new payment plan with the lender. About two-thirds of those filing Chapter 7 bankruptcy indicate on Form 108, the statement of intent, that they plan to go with this option.

Reaffirming the debt protects the lender, who wants assurance youll continue to make payments on the vehicle loan. One of the consequences of bankruptcy is that creditors, and the bankruptcy court, want to make sure that youll be able to pay obligations going forward and they are strict about it. Lenders that agree to a reaffirmation plan will send an agreement to your bankruptcy attorney, who must approve the plan. If you are working without an attorney, the reaffirmation plan has to be included with the documents when you file for bankruptcy. the bankruptcy court will hold a reaffirmation hearing to determine if you can afford to make the car payments.

If reaffirmation is approved, you must keep up with the payments in order to keep the car. You cant refile for another Chapter 7 bankruptcy for eight years after discharge of one, so that option is gone as far as keeping the car after bankruptcy if you cant make payments.

How To Claim Your Exemptions

To claim your Chapter 7 bankruptcy exemptions, you must list them under your Schedule C: The Property You Claim As Exempt. Itâs important to list all the property that you want to protect on your Schedule C.

Anything that you do not claim as exempt, regardless of if itâs eligible for protection or not, will not be counted as exempt. This means that even if your property falls within your exemption limit but you do not claim it, your bankruptcy trustee is still allowed to sell it.

In Many Cases You Can Keep Your Home In Chapter 7 Bankruptcy Learn More Here

By Cara O’Neill, Attorney

You won’t necessarily lose your home in Chapter 7 bankruptcyespecially if you don’t have much home equity and your mortgage is current. Whether you can keep your home after filing for Chapter 7 bankruptcy will depend on the following factors:

  • whether your mortgage is current
  • if you’ll be able to continue making the payments after bankruptcy
  • how much equity you can protect with a homestead exemption, and
  • the amount of equity in your home.

If you’re behind on your payment, in foreclosure, or have more equity than you can protect, you’ll have a better chance of keeping your home in Chapter 13 bankruptcy. Filers faced with those circumstances should learn more about choosing between Chapter 7 or Chapter 13 when keeping a home.

For step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.

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Do You Lose Your House If You File Chapter 7 Bankruptcy

North Carolinas homestead exemption allows you to exempt $35,000 in your homes equity if you use the property as your residence. This exemption goes up to $60,000 if you are 65 or older, you owned the property with another person as tenants by the entirety or joint tenants with rights of survivorship, and the co-owner is deceased.

For the couple who own real estate in North Carolina and the deed to the property reflects that ownership as a married couple and the couple has no joint unsecured debts, they can claim the property as exempt based on Tenancy by Entirety and there is no limit on the exemption.

How Much Equity Do You Own In The Property You Are Trying To Keep

How to Keep Your Home When You File Chapter 13 Bankruptcy

First, you must determine how much equity you own in the property that you are hoping to retain. Equity is determined by subtracting the balance of any mortgages or other loans secured by the property from the value of the property. For example, if your house is worth $100,000.00, and you have a balance of $75,000.00 on your mortgage, then you have $25,000.00 of equity in your house.

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Keeping Your Car Chapter 7 Vs Chapter 13

People who file for bankruptcy generally have cars that are of less value than the average consumer, but they also have more of their wealth tied up in their car. The CBP car bankruptcy study points out that makes sense. People come to bankruptcy court with their wealth depleted, and the data bear out the intuition that people will hold onto their means of transportation if they can, the study says.

The numbers also show that Chapter 13 bankruptcy is a better bet for keeping a car than Chapter 7.

Chapter 7 bankruptcy involves liquidating assets to pay off unsecured debt, and even with the car exemption, it takes a lot of number crunching to keep your car.

Chapter 13 bankruptcy, on the other hand, creates a repayment plan that takes into account your income and assets, with an eye toward keeping what you own. Unsecured debt is discharged if the plan is successfully completed. Its an especially good option if you have a lot of equity in a car, though that equity will be considered part of the wealth that is the foundation of your payment plan. If youre behind on payments, the plan will include catching up.

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New Brunswick Bankruptcy Exemptions

In New Brunswick, property exempt from seizure in bankruptcy is set by the provincial government and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.

Example: If you have a car worth $6,000 and you still owe $3,000 on the loan, the equity you have in the car is $3,000. In New Brunswick, the exemption for a car is $6,500. In this case, you would be entitled to keep the car and your unsecured creditors cannot take this from you during the bankruptcy process.

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Will I Lose My House If I File For Bankruptcy

This depends on several factors, and is best answered by a Licensed Insolvency Trustee. In most provinces, your home is one of the assets subject to liquidation in a bankruptcy. However, certain provinces exempt some or all of the value of a principal residence.

If your home is mortgaged, only the equity is subject to seizure. In the event you are able to retain your home, a Trustee can help you decide if keeping your home is the most prudent financial strategy.

See also: What Happens to My House After Filing Bankruptcy?

Common Law Property States

If I FIle for Bankruptcy Can I Keep My House and Car? | Learn About Law

In common law property states, any assets that your spouse acquired separately during the marriage are not considered part of the bankruptcy estate.

This means that their individual assets will be protected.

For jointly owned property, only your share of the property will be used to pay back your creditors.

However, if the property cannot be divided, these jointly owned assets can be sold by the bankruptcy trustee to pay off your debt.

The trustee will then pay your spouse their share of the proceeds, while your share will be used to pay off your debts.

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Dealing With Your Vehicle

One of the forms you will file with the bankruptcy court is called the Statement of Intention. In this form, you tell the court what you plan to do with property that is securing a debt you owe, like real estate or a vehicle.

If you own your vehicle but are still paying on the loan, you have a few options on how to deal with it in Chapter 7 bankruptcy.

Reaffirmation

You can reaffirm the debt, keep your vehicle, and continue making payments. This means the debt will not be discharged and you will continue making monthly payments during and after bankruptcy. If you miss future payments the lender will have the right to repossess the vehicle and possibly try to collect on any deficiency between the balance you owe and the amount they get when selling the vehicle.

If you select this option in your Statement of Intention, your car lender will send you a reaffirmation agreement for you to complete and return. In some bankruptcy cases a reaffirmation hearing will be scheduled.

Surrender

If you choose to surrender your vehicle, then it will be repossessed and the debt will be discharged in your bankruptcy. Filers with high car payments they cant afford often choose to surrender their car to get out of the debt.

Redemption

Help If I File Bankruptcy What Happens To My House

There may come a time that you struggle with money, and when youre in over your head in debt, you need to consider your best options. One way to deal with unmanageable debt is to file bankruptcy. But wait! What about your house? If youre wondering, Can I keep my house if I file bankruptcy? The answer to that depends on the type of bankruptcy that you file: Chapter 7 or Chapter 13. Let us help you with this guide.

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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.

What Happens If Your Home Is Over The Allowance

What Property Can You Keep If You File Bankruptcy?

Most exemption allowances are around the $10-15,000 mark.

As youre aware, houses in Canada are worth a lot more than that.

Does this mean that you will have to relinquish your home if its above this threshold?

You still get to keep your home if it is above the exemption allowance.

It just means that you only retain equity up to the limit.

What happens to the rest of it? Well, there are typically two options:

Repurchasing home equity means that the remaining value of your home is bought by someone else.

They effectively use that money to pay your creditors.

This is usually done by banks or credit unions.

However, you still get to live in the home.

For all intents and purposes, it is still your home, just a large chunk of equity has gone from it.

Filing a consumer proposal is an alternative to bankruptcy where you reach an agreement with creditors on how you will pay them.

This can sometimes reduce your overall debt payments and ensures you keep all of your home and as much of the equity as possible.

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Chapter 13 Bankruptcy Waiting Periods

Filing Chapter 13 leads to a reorganization of debt, with scheduled payments to clear those debts . Because Chapter 13 bankruptcy includes regular payments, it does not affect your credit score as much as Chapter 7, and the waiting period for some loans is shortened.

If the bankruptcy court dismisses the bankruptcy , the waiting period is four years from the dismissal date. If the court discharges the case , the time is four years from the date you filed and two years from the discharge date.

Its important with Chapter 13 to make those payments on time and in full not doing so will anger the court and negatively affect your home-buying ability.

Specific times for specific loans after Chapter 13 include:

  • For a conventional loan, four years from dismissal date. If the court discharges the case, the time is four years from the date you filed and two years from the discharge date.
  • One year for a USDA loan.
  • FHA and VA loans are the most generous following Chapter 13 these lenders simply require the court to dismiss or discharge your bankruptcy before you apply. FHA also will guarantee a mortgage as soon as 12 months after you file Chapter 13, provided you are making court-ordered payments on time.

What If I Have Very Little Equity

If you have recently mortgaged or re-financed your home, you may have very little equity in it . If this is the case, there is a chance you can keep your home, and continue your mortgage payments, if you can find a way to pay this amount into the bankruptcy through other means. This is a matter you can discuss with a Licensed Insolvency Trustee for clarification.

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How Foreclosure Prolongs A Mortgage Waiting Period

Sometimes a bankruptcy isnt the only financial setback a potential mortgage borrower is dealing with. The bankruptcy may have been preceded by foreclosure on a mortgage.

Having both a foreclosure and bankruptcy may prolong the mortgage process more than just a bankruptcy, and may add other requirements.

The following chart shows the length of time after a foreclosure a potential borrower may apply for a loan:

FHA
  • 2 years from discharge date
  • 4 years from dismissal date
  • 7 years in all other cases

Buying A Car After Completing A Chapter 7 Is Definitely Possible And Not Uncommon

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The longer that you can wait to make a large purchase after receiving your discharge, the better off you will be. While a bankruptcy does stay on your credit report for 7-10 years, it also erases most of the other dings on your report and allows you tostart rebuilding almost right away.

Following the above suggestions can help ensure that you get the best deal possible. Remember that buying a used car and/or obtaining a car loan that you can afford without financial strain will help to build back up your positive credit after a bankruptcy and help maintain your financial health moving forward.

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Bankruptcy Law Attorneys Offering Free Case Consultations In Pennsylvania

If you or someone you know is going through a tough time financially, we may be able to assist. Young Marr & Associates understands the difficulties associated with excess debt and how important it is to understand your rights when youre in debt. For this reason, we dedicate our efforts to protecting your rights and helping you go through the bankruptcy process. Call our Pennsylvania bankruptcy attorneys today for a free, confidential consultation. Our phone number is 701-6519.

Bankruptcy Resource Center

Can You Pay Your Monthly Mortgage Payments

The upshot is if you survived the bankruptcy process and did not lose ownership of your home. You will be able to keep your house afterward. The bankruptcy will allow you the opportunity to rid yourself of all the rest of your debt which will make paying your mortgage payments less burdensome for you.

On the contrary, if you dont have enough money to pay your mortgage payments. The bank might foreclose on your home.

Filing bankruptcy provides you with a unique opportunity to get your financial life under control. Therefore, take all the time you need to decide whether you should file bankruptcy. Depending on your circumstances, you may be able to walk away from the mortgage and house with no additional financial consequences.

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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.

Keeping Your House And Going Bankrupt

The Automatic Stay: How Filing Bankruptcy Can Help You ...

Filing for bankruptcy is often seen as the last-ditch solution for anyone in debt.

When all other options have been exhausted, this can help you become debt-free and have a fresh financial start.

Its not for everyone, and there are some concerns that many people have.

Namely, can you keep your house if you file bankruptcy?

Nobody wants to live in debt, but you equally want to have a roof over your head.

Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation

The confusion comes from the idea that bankruptcy means you have to hand over your assets.

In truth, many of your assets are added up and used to help pay your creditors as much as possible.

Does this mean that someone is going to come and repossess your home?

In the majority of cases, you can and will keep your house when filing for bankruptcy.

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