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How To File Bankruptcy Without Losing Your Home

Consider The Equity You Have In Your House

Should You File Bankruptcy After Losing Your Job

Don’t worry, Chapter 7 filers, there are still ways you can keep your house. When deciding whether your house is exempt under Chapter 7, the trustee only considers the equity in your house.

Equity is the market value of your house minus the balance on your mortgages or home equity loans. Many bankruptcy filers have little or negative equity in their houses, so their houses are exempt and need not be sold in the bankruptcy process.

However, if you have equity in your home over the exemption limit, you may be forced to sell your house to pay your debt or “buy it back” by paying the trustee the value of your house.

What Controls Keeping My Home After Bankruptcy

The decision to declare bankruptcy often comes at an overwhelming time of your life. If you’re thinking about declaring bankruptcy, the chances are that you’re worried about how you can manage all your finances now and in the future.

There are three factors that determine whether you can keep your home in bankruptcy proceedings:

  • The Chapter of bankruptcy you file
  • How much equity you have paid into your mortgage
  • If you can afford your monthly mortgage payments while facing debt

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.

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How To File For Bankruptcy

  • Figure out which type of bankruptcy to file for.
  • Gather and organize the necessary documents .
  • Take a credit counseling course.
  • Fill out your bankruptcy paperwork.
  • Make sure you have your fees .
  • Print your bankruptcy paperwork.
  • File your bankruptcy paperwork.
  • Send all the necessary documents to your bankruptcy trustee .
  • Meet with this trustee in a 341 meeting .
  • Take a debtor education course.
  • Finish the bankruptcy process .
  • Rebuild your life and know you can rise from this situation!
  • Yeahit’s going to feel like you’re digging up and showing off every bit of private information you’ve ever had.;Really, the only upside is they dont ask for that awkward eighth grade yearbook photo.

    Keeping Your Home In Chapter 13 Bankruptcy

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    The good news about filing for Chapter 13 bankruptcy is that its designed to allow you to keep your house. With Chapter 13, you, the bank and your creditors all decide on a repayment plan that takes three to five years, but your assets are not sold off. Once the plan is completed, your unsecured debt is discharged. The trick, of course, is making it to the end.

    The plan that is worked out with the court and your creditors will include a way to catch up on and pay your mortgage if you can afford it.

    Under a Chapter 13 repayment plan, if youre behind on your mortgage the plan will work out how you pay the past due payments over the three to five years, but you also must make the current monthly payments.

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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.

    Are You Behind In Your Car Payments

    If you are behind in your car payments, you will lose your car in Chapter 7 bankruptcy unless you take care of the arrearage or get the lender to agree to some other payment plan.

    Some options include:

    Redeeming the Property

    In Chapter 7 bankruptcy you can “redeem” a car by paying the lender the current replacement value of the car. You can only do this if the car is exempt or the trustee has “abandoned” the property . Because this requires a lump-sum payment, however, it’s often not feasible for people considering bankruptcy.

    Reaffirming the Debt

    You can keep the car if you and the lender sign a new payment agreement. You can change the terms of your original contract in this agreement, but the lender has to agree. The downside: If you later default on the loan, you will be liable for the deficiency balance.

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    Will I Lose My House If I File Bankruptcy

    At Rauser & Associates Legal Clinic LLP, we understand the stress and worry that accompany financial peril. We have helped more than 40,000 clients discharge millions of dollars of debt through bankruptcy. Clients trust our knowledge, experience and thorough understanding of the Bankruptcy Code and rules. If you are considering filing for bankruptcy, but are concerned about losing your house, do not make a decision until you talk to a lawyer.

    Free Case Evaluation ยท Call

    Individuals facing dire financial straits often resist filing for bankruptcy protection because they do not understand the benefits and protections available. Whether they have received information from friends, family or television commercials, chances are good that the information is not always completely accurate. The best way to learn about your financial options and the protection afforded by the United States Bankruptcy Code is to discuss your matter with an experienced Ohio bankruptcy attorney.

    Which Of My Debts Are Not Discharged In Chapter 7

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    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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    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.

    What Happens To Your Mortgage When You File For Bankruptcy

    A mortgage is a secured debt that means that if you pay, you keep the security on it, which is your house. If you dont pay, you lose it. Bankruptcy, of course, complicates that.

    Under Chapter 7, if its determined you cant pay your mortgage, then the bank will foreclose. The house will no longer be yours, and youll have to move out. You dont make any more payments in most cases.

    With Chapter 13, you continue to make monthly mortgage payments, and also make past due payments, keeping the mortgage alive. But its not easy more Chapter 13 cases were dismissed in 2020, which means finished without being completed, than were discharged. When a case is dismissed, its as though the person never filed. The majority dismissed cases was because homeowners didnt or couldnt make their payments. Whatever the reason, the debts are still owed, which puts you right back where you were before filing.

    Whether you stick with the payment plan or cant, you are still responsible for paying your mortgage or you will lose your house.

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    How To File Bankruptcy And Keep My House

    You can often keep your house and car by claiming bankruptcy exemptions.

    When you file for bankruptcy relief, you are entitled to use bankruptcy exemptions to protect the equity in some property from being used to repay your unsecured creditors. Bankruptcy exemptions apply to a wide variety of assets, including homes, vehicles, retirement accounts, clothing, tools of the trade, government benefits, and other personal property.;

    Debt Collectors Won’t Leave Me Alone Will Bankruptcy Stop The Harassment

    Let go of the shame of losing your home

    Yes, bankruptcy’s automatic stay requires most creditors and debt collectors to stop all collection efforts against you until the bankruptcy is over.

    But if all you want to do is stop debt collectors from contacting you, there is an alternate route. Under the Fair Debt Collection Practices Act, you can request that debt collectors stop contacting you. Send a letter stating that you want the collection agency to cease all communications with you. All agency employees are then prohibited from contacting you — except to tell you that collection efforts have ended or that the collection agency or original creditor intends to sue you or take advantage of some other legal remedy.

    Keep in mind that this remedy only applies to debt collectors. Creditors can continue to contact you . To learn more about dealing with debts and debt collection agencies, see Debt & Collection Agencies section.

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    This Is How Debt Discharge In A Chapter 11 Bankruptcy Works

    Business debt restructuring involves repayment of debts in order of their priority priority debts come first, followed by secured debt, semi-secured debt and then the different types of unsecured debt. The reorganization plan must include all debts and must be drafted by an experienced attorney who is adept in representing business owners in a Chapter 11 bankruptcy.

    Small businesses very rarely explore bankruptcy except when there are serious financial pressures. If your company has slipped behind with lenders and you are looking at chapter 11 bankruptcy, there are additional possibilities including business debt consolidation or debt management assistance.

    Q2 Will The Trustee Immediately Sell My House

    If you have significant nonexempt home equity you cant protect, the trustee will sell your property, following the usual real estate selling process. The trustee doesnt need to rush the sale because a quick sale would usually result in lesser value for your home, which is not going to benefit you.

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    Filing Bankruptcy In Colorado: 4 Things You Need To Know

    6 days ago Filing bankruptcy in Colorado consists of taking a credit but it is possible to often file Chapter 7 bankruptcy without an attorney.

    Jun 30, 2021 If you own little property and dont make a lot of money, it might be possible to file bankruptcy pro se . But while filing;

    Apr 4, 2020 So, a debtor who qualifies to file bankruptcy under Chapter 7 can do so in the Bankruptcy Court for the District of Colorado if he or she has;

    Q3 Will I Get A Fair Value For My House

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    The trustee will hire a real estate broker upon the courts approval, list the property for sale, and find a buyer. It will be sold based on fair market value. You can hire a licensed real estate appraiser to do a full house appraisal, which can be expensive. Alternatively, your appraiser can do a comparative market analysis to determine the value of your home.

    The trustee will also appraise your house, and if theres a disconnect, the court will weigh in both assessments and decide on the final value. The court will also need to authorize the sale of your house to the chosen buyer. Then, the creditors will be notified of the sale and given a chance to object.

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    Will All Of My Debts Be Canceled In Bankruptcy

    It depends on the type of debt you have. Bankruptcy is a good vehicle for eliminating credit card, medical debt, deficiencies resulting from repossession or foreclosure, and other unsecured debt. In a Chapter 7 bankruptcy, this debt is discharged at the end of your bankruptcy. In Chapter 13 bankruptcy, you may have to pay off a portion of your unsecured debt through your repayment plan. Keep in mind that if you have debts secured by property , the cancellation of the debt does not mean you get to keep the property. To learn what happens to secured property in bankruptcy, see Bankruptcy FAQ .

    Some debt is never discharged in bankruptcy — including child support and spousal support arrears, student loans , and tax debts first due within the previous three years. To learn more about which debts can be wiped out in bankruptcy, see What Bankruptcy Can and Cannot Do.

    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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    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.

    Get Your Free Case Evaluation

    Chapter 7 Bankruptcy: Will You Lose Your Home?

    If you have further questions about protecting your house through the bankruptcy process, contact any of our convenient Ohio offices by calling . Offices in Columbus, Cleveland, Akron, Youngstown, Canton and throughout Ohio. Someone is available six days a week to discuss your options.

    We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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