Can I Keep My House
This is one of the biggest questions when it comes to filing bankruptcy. Generally speaking, you usually can save your home and still obtain debt relief under either Chapter 7 or 13. The trick is to determine which category best suits your situation. Brian G. Hiatt can assist you in making this determination, but here follows a brief, general discussion of the issues involved.
Asset Exemptions Regional Differences And Talking To A Licensed Insolvency Trustee
Bankruptcy asset exemptions in Canadavary from province to province.
Whether youre in Quebec or Ontario licensed bankruptcy trustees can help you figure out what applies to your circumstances.
Contact a licensed bankruptcy trustee, and youll receive a free consultation.
That will give you a chance to figure out whats best for you.
During the bankruptcy process, trustees look out for the rights of both creditors and debtors.
They ensure that your bankruptcy is fair to all parties, and theyll also answer any questions you have.
Where your home is concerned, youll receive guidance about how to go forward, based on your locality and financial status.
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.
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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.
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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Can The Bankruptcy Court Cram Down An Upside Down Home Loan
No it cannot. The bankruptcy court cannot force a lender to modify a home mortgage, and cannot modify the term of the home mortgage without the lenders consent. Congress enacted a special provision of the Bankruptcy Code making it impossible for the bankruptcy court to modify a secured home mortgage.
How To Keep Your House In Bankruptcy
Bankruptcy attorneys tell us that this is often the first question that they are asked, “Will I Lose My House if I File Bankruptcy?” We understand. Our homes are a safe zone for our families and, fortunately, the law recognizes that we all need somewhere to call home.
Keeping Your House: Filing Chapter 7 v. Chapter 13 Bankruptcy
If you file for bankruptcy protection under Chapter 13 of the U.S. Bankruptcy Code, you can absolutely keep your house so long as you can make the mortgage, tax, and insurance payments.
Filing Chapter 13 may actually help you to keep your house because your debts are reorganized meaning that they may be renegotiated under more favorable terms.
- Debt principal may be reduced.
- Interest charges may be reduced or eliminated.
- Past due payments are stretched out over 3 to 5 years.
- Unsecured second and third mortgages may be eliminated.
All of this makes it easier to meet your monthly house payments.
If you file for bankruptcy protection under Chapter 7 of the U.S. Bankruptcy Code, you can keep you house so long as you can make the mortgage, tax, and insurance payments AND so long as any equity in the home is covered by your bankruptcy exemptions .
Filing Chapter 7 may actually help you to keep your house because some non-secured debts are discharged. For example, when you no longer have to pay credit card, medical, and personal debts, you have more money to pay for housing expenses.
Keeping Your House: The Bottom Line
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Will The Bankruptcy Trustee Take My Nonexempt Property
The Chapter 7 bankruptcy trustee sells nonexempt assets and uses the sales proceeds to repay your unsecured debtlike credit card balances, medical bills, and personal loansthat isn’t secured by collateral. Bankruptcy exemptions don’t cover specific luxury items, such as fur coats and hobby equipment . So if you own an expensive artwork, it’s unlikely that you’d find an exemption to cover it.
Even so, you might be able to keep a nonexempt asset if one of the following applies:
- the trustee decides to abandon it
- you repurchase it from the trustee, or
- the trustee agrees to accept a different exempt asset in exchange.
Another option? File for Chapter 13 bankruptcy. Debtors can keep all of their property in a Chapter 13 case.
If I File Bankruptcy What Happens To My House
That may depend on which chapter you use.
- Chapter 7: This will be more helpful if youve kept up with your mortgage payments but havent developed equity up to the exemption amount. If youre in financial trouble, but you focused on paying for your home while other debts and obligations piled up, this may be a good option. You must also be able to continue to make mortgage payments in the future.
- Chapter 13: If youre not current on your mortgage payments but want to keep your home, Chapter 13 may help you catch up. Youd need to keep up with your mortgage debt and your repayment plan. For many bankruptcy debtors, most of their obligations are considered nonpriority unsecured debt . When theyre discharged, its easier to pay your mortgage. Some of those debts include credit card debt, medical debt, utility bills, and most lawsuit judgments against you. If you cant make your payments, your case will convert to Chapter 7, and youll lose your home equity beyond the exemption amount
Chapter 7 may be the better option if youre a good fit. Many homeowners try to keep their house through Chapter 13, but often the payments are too much for them to handle. If youre disciplined and face no other financial problems during the plans payment period , you may be able to make it through and keep your house.
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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.
Exchanging An Exempt Asset For Nonexempt Property
Most debtors in Chapter 7 bankruptcy don’t have enough money to buy back a nonexempt asset from the trustee. If you want to keep a specific nonexempt asset, you can offer to give the trustee one of your other exempt assets in exchange. In general, whether the trustee will agree to accept a different asset in exchange for your nonexempt property will depend on the value of the asset and the cost and labor associated with selling each type of property.
Learn more about the basics of property exemptions in bankruptcy and when a trustee might object to your exemptions.
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Rehousing If You’re Homeless Because Of Bankruptcy
If you risk being made homeless because of bankruptcy or it’s already happened to you, you should contact your local authority as soon as possible. They will consider your circumstances to see if you’re eligible for help with re-housing.
If you’ve sold your home in a bid to avoid going bankrupt, the local authority may not help you with alternative housing, as it may decide you’re intentionally homeless. However, you should speak to your local authority at as early a stage as possible if this is likely to apply to you.
How To Keep Your House In Bankruptcy : Keep My House And Go Bankrupt
If youre reading this article, the chances are youve been struggling with debt for a while.
That can be a lonely place.
Its easy for things to get out of control.
Your stresses can stack up just as quickly as your creditors but you do have some options available.
Bankruptcy is one of those options, but there are some pretty popular misconceptions surrounding bankruptcy.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
In this article, were going to try to set the record straight. Youll learn how its possible to regain some control over your debts and day-to-day life.
Well also examine how its possible to keep your house during bankruptcy in Canada.
Bankruptcy can be a scary word but the fact is, it exists to help those in financial trouble.
One of the most popular misconceptions associated with bankruptcy is that its a punishment.
That couldnt be further from the truth.
While in many, the word invokes visions of something final the reality is bankruptcy provides a fresh financial start.
If you have lots of unsecured debt and few assets, or little equity in your home, bankruptcy can give you some breathing space.
Debt is difficult to escape because once you get behind, the creditors just keep coming.
When much of your debt is unsecured, youre more likely to be paying higher rates of interest.
The result is you get further and further behind.
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Number One Reason To File Bankruptcy Is Not Creditors But Protecting Your Stuff
Nowadays, you would really have to be an idiot to believe that the economy has turned around and things are getting better. When looking around and talking to friends there is no one I know who can testify that things are better for them than they were seven years ago. Although, its not a topic that people like to discuss. Its almost like the normalcy bias has affected everyone in the United States and to go against the mainstream media makes you a conspiracy theory nut. Im not afraid to say it, the economy sucks and doesnt appear to be getting any better for me and my family. I suppose if you are heavily invested in the stock market you might be doing okay but even that is rolling the dice with the family farm. The dinosaur mainstream media continues to overwhelm the masses with nonsense that is otherwise known as the normalcy bias. In this case, it causes people to underestimate both the possibility of a financial disaster occurring and its possible effects. There is this idea that since they have never experienced it before, it will never happen in the future or a least their lifetime. This is why so many people on the verge of filing bankruptcy continue to leverage themselves into oblivion. Thanks to the too big to fail banks and quantitative easing that is allowing these guys to continue loaning money to people who cant afford to pay it back.
Can You Buy A House After Bankruptcy
*As of July 6, 2020, Rocket Mortgage® is no longer accepting USDA loan applications.
Do you have a bankruptcy on your record? If so, it can feel like youll never be able to return to financial normalcy. But the truth is that bankruptcy isnt a permanent black mark on your credit report. Its even possible to buy a home after bankruptcy if you know which steps to take.
Well take a closer look at how to buy a home after bankruptcy. Well also show you how long you need to wait after filing to apply for a loan and how you can maximize your chances of success.
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How Do I Know How Much Equity I Have
You can calculate your homes equity by taking the value of your house, and subtracting the amount you owe on your mortgage and the currently owed property taxes from this value.
House value amount owed on mortgage currently owed property tax = Equity
In most personal bankruptcies, the home must be sold so that this equity value can go to your creditors.
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.
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Timing Rules And Bankruptcy Exemption Selection
Some states have significantly more generous bankruptcy exemptions than others. But you can’t move there and immediately use them. To prevent abuse, you must live in the state for at least two yearsotherwise, you’ll use the previous state’s exemptions. Here’s how it works.
If you’ve made your permanent home in your current state for at least two years, you can use the state’s exemptions .
If your domicile hasn’t been in the same state for two years, the rules get more complicated. So prepare yourselfthis is going to sound strange. But we’ll explain it two ways so you’ll know you didn’t read it wrong. Here’s the first way: You’ll choose the state that you lived in the longest during the 180 days immediately before the two years before filing.
Did you get that? Here’s the second explanation, just in case. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.
Still confusing? Let’s try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you’d qualify to use the exemptions of whichever state you resided in the most during the July 1, 2019, through December 31, 2019 period. You wouldn’t have to file your case there, but you’d use that state’s exemptions. Hopefully, that helps!
Determine Equity And Exempt Status
When you file for bankruptcy, you are allowed to keep some property, called exempt property. If the equity in your home is fully exempt, you should be able to keep it. You can figure out your equity by taking your homes fair market value and subtracting the loans and liens on the property. For example, if your home is worth $500,000 and your mortgage debt is $420,000, then your equity is $80,000. At the time of publication, California lets you keep $100,000 as exempt property if a family lives in the home. Since the state exemption is greater than your equity, you can stop the bankruptcy trustee from selling your home. If, however, the exemption was only $75,000, its likely the bankruptcy trustee would sell the home to pay off your creditors.
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