Talk To A Bankruptcy Lawyer
Need professional help? Start here.
If You Have Nonexempt Property
Even if you have property that isn’t protected by an exemption, you may be able to keep it. First of all, you will get to keep it if it isn’t the time and money the trustee would spend taking it and selling it. For example, if you own a second car that’s worth $5,000, and you still owe $4,500 on it, the Chapter 7 bankruptcy trustee might decide not to take it. Once the trustee pays the costs of repossessing, storing, and selling the car, what’s left will probably be only enough to cover your car note. Your other creditors won’t get anything out of the deal. Similarly, if you own property that just isn’t worth much , the trustee probably won’t bother to take it.
If your nonexempt property is worth more, you may be able to negotiate with the trustee to keep it, but you’ll have to give something up in exchange. If you have exempt property you don’t need, you might be able to trade that so you can keep your nonexempt property. For example, if you really want to keep your nonexempt darkroom equipment , you might offer to give the trustee an antique armoire worth about the same amount, even though you’d otherwise get to keep it as exempt furniture.
You can also offer to “buy back” your nonexempt property, if you can come up with enough cash to pay about what your creditors would have received if your property were taken and sold. You could borrow the money, use your income to pay, or sell exempt property.
Need Help Keeping Your House In Chapter 7 Bankruptcy
It is definitely possible for you to keep your house in chapter 7 bankruptcy. However, it is important that you know your situation before filing bankruptcy. There are lots of rules in a chapter 7 case, and there may be a better option for you other than a chapter 7. A bankruptcy lawyer will be able to weigh in on your options and help you figure out your best option.
If you need to speak with a bankruptcy lawyer, feel free to call our office. Our experienced chapter 7 bankruptcy attorneys are here to answer any questions you may have. The consultation with our attorneys is free of charge.
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.
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.
Also Check: Toygaroo
If I File Bankruptcy Will I Lose My House
The first question anyone contemplating bankruptcy asks is either “Is bankruptcy right for me?” or “Will I lose my house?” We answered the former above and now we’ll delve into the latter. Actually, the house question is probably asked more commonly.
And, we have good news.Many folks are able to keep their house and bankruptcy. The best test is whether you can make up any back payments and make current and future payments as well.
- If you can make the mortgage payments, you likely can keep your house.Remember that you need to be able to make your real estate tax and homeowners’ insurance payments as well.
- There is more good news: Second and third mortgages that are no longer secured by the value of the property can be discharged and make keeping your house easier.
Chapter 7: If you file a Chapter 7 bankruptcy, your home state may offer exemptions that protect the equity in your house up to a certain amount. Some states protect just a few thousand dollars of equity and other states protect 100% of home equity – other states are somewhere in between and some states provide a choice between home state and federal exemptions.
- See our How to Find a Bankruptcy Attorney article that references your state to determine how much equity you can protect.
- If you live in New York, go to How to Find a New York Bankruptcy Attorney.
Never give up your house without getting good advice.
In Chapter 13 bankruptcies, so long as you can make all house payments, you can keep your house.
How To Know If Your Home Is Exempt
Figuring out whether your home is exempt is a simple math problem if you owe more than the market value, its exempt. Be sure to check what the exemption rules in your state are, because thats part of the math. Less simply, the paperwork you fill out requires you to list what you owe, the exemption and your equity. You file the items you believe are exempt in Schedule C. This not only includes your house, but you also get an allowance for your car, and items like furnishings, things necessary to do your job, and more. Its always a good idea to get help from an expert in bankruptcy wholl guide you through this complicated procedure.
Read Also: How Many Bankruptcies Has Donald Trump Filed
Are Debts Affecting Your Ability To Keep Up With Your Mortgage
Ask yourself this question: If I could deal with all of my other debts, would paying my mortgage be easier? We help people answer that question every day.
Its your home, so you always pay your mortgage, but you are falling behind on your credit cards and other bills, and you worry that you may soon also fall behind on your mortgage payments. You worry that you may lose your home.
You can file bankruptcy even if there is equity in your home. If you owe more money to your creditors than the value of what you own you are considered insolvent. If you are insolvent you are eligible to file for bankruptcy or proposal in Canada.
With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house. In fact, by eliminating other debts that are making it difficult to keep up with your mortgage payments.
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.
You May Like: Buying A New Car After Bankruptcy Discharge
Your Home Is Excluded From The Bankruptcy
In Canada, there are rules in each province that stipulate certain assets are excluded from the bankruptcy terms.
These are called exemption allowances, and they differ between the provinces.
However, a house will always fall into this category.
The reason for this is quite obvious.
Yes, you need to repay your debts as best as you can.
But, you cant be expected to live on the streets.
Keeping your home lets you continue with life as best as you can after bankruptcy.
Its worth noting that each province also has an exemption allowance limit.
This refers to the amount of equity youre allowed to keep.
Again, it changes from place to place.
To understand this, lets look at an example.
Imagine the exemption allowance for home equity is $15,000 in your province.
Effectively, this means you can keep home equity up to that value.
Keeping Your House Depends On Where You Live
Its very, very state-specific, says debt relief expert Michael Bovee, who is the co-founder of debt relief company, Resolve. If you live in Florida or Texas, youre in good shape, but in some states, you could be out of luck.
Thats because with a bankruptcy, youre allowed to exempt certain assets like your home, car, jewelry and household goods. But how much you can exempt varies quite a bit from state to state.
You May Like: What Is A Bankruptcy Petition Preparer
What About Second Mortgages
If you have a second mortgage, then it could be dismissed during bankruptcy that second mortgage lender is considered an unsecured debt during the process. Your primary lender has priority and will be paid first. In some cases, a second mortgage could be removed entirely your bankruptcy lawyer can help you determine what the most likely scenario is for your second mortgage.
Consider If You Can Afford Your Mortgage Every Month
If you kept your house throughout the bankruptcy process, you are free to keep your home after the bankruptcy â 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, you’ll be able to keep your house.However, if your income will not allow you to make your mortgage payments, the bank may eventually foreclose on your home.
Bankruptcy filers in this situation must carefully consider whether they want to keep their home, since bankruptcy gives them a unique opportunity to just walk away from the house and mortgage with no additional consequences, in most cases. It may also be easier to get your financial life under control if you are not burdened by large monthly mortgage payments.
Read Also: How Many Times Has Trump Declared Bankruptcy
Which Assets Are Included In Ontarios Bankruptcy Exemptions
This is one of the questions on everyones minds as they consider if declaring bankruptcy is the right move for them. It is a fair question. The process of declaring bankruptcy includes surrendering your assets to a Licensed Insolvency Trustee in exchange for being discharged from your debts. The surrendered assets will be liquidated , and any resulting funds will become part of the bankruptcy estate to be distributed by the LIT to your creditors in accordance with the Bankruptcy and Insolvency Act . Learn more about how your assets are handled during bankruptcy.
Dont worry this does not mean that you will lose everything!
The BIA also has protections in place to make sure that you can maintain a reasonable standard of living and do not lose all that you own by declaring bankruptcy. These are called exemptions and vary by province. If you live in Ontario, its important to know the Ontario bankruptcy exemptions. You are only required to surrender any non-exempt assets to your trustee. This changes the question from what will I lose? to what can I keep?
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:
Don’t Miss: How Many Bankruptcies Has Donald Trump Filed
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.
Different Ways To File For Bankruptcy
Bankruptcy is a process in which the court decides what the best route is for a person with overwhelming debt to pay as much as possible, given their assets. The solution may be Chapter 7, which discharges debts but also liquidates assets, though not all, of a persons assets. Chapter 13 bankruptcy allows a person to keep their assets, but puts them on a strict repayment plan.
No matter which type you file for, the court puts an automatic stay on any foreclosure action. This means that if your house was being foreclosed on, that procedure will stop as the court sorts out your ability to pay. It doesnt mean, however, you automatically keep your house.
In both types of bankruptcy, there is a homestead exemption, a way to protect some of the equity you have built. Its another element of bankruptcy designed to make it more possible to keep your house. Each type of bankruptcy is a totally different process, but in each, the idea behind exemptions is that the person needs to protect some important assets in order to get by. There are also exemptions for keeping your car and other necessary items. The amounts vary by state, but the types of things you can exempt are limited to what you need to get by. Luxury items are not on the list.
You are required to have lived in a state, in that house, for 40 months, in general, to claim a state exemption. Check with your state rules to see what the details are.
You May Like: How Many Times Has Trump Filed Bankrupsy
If Your Income Increases During Your Chapter 13 Bankruptcy
If your income increases during your Chapter 13 bankruptcy that increase must be reported to the bankruptcy trustee and it may impact how much you pay to your creditors. However, in a Chapter 7 bankruptcy, if you have a HELOC you will need to repay it only if you want to keep your home or you can discharge it and your mortgage loan and surrender the home to the lender. Its important for each debtor to carefully weigh the feasibility of keeping their home. Ask yourselfcan I really afford to keep this home?
If you do not earn enough income and attempt to keep your home during bankruptcy, you could possibly face foreclosure after your bankruptcy and end up in a bad financial situation again.
Dont Miss: What Does Declaring Bankruptcy Do For Me
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.
Don’t Miss: Has Mark Cuban Ever Filed For Bankruptcy
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.