15 Tips: Can Bankruptcy Take Your House
Many people who are considering filing for bankruptcy, as explained over at runrex.com, are worried about losing their homes. This article will look to highlight 15 tips that address the fear that bankruptcy can lead to you losing your house as well as how you can protect it when filing for bankruptcy.
- Your house and Chapter 13 bankruptcy
For most people, Chapter 13 bankruptcy is the way to go if they are worried about losing their house due to filing for bankruptcy, as explained over at guttulus.com. This means that if you are worried about losing your house during bankruptcy, then you should seek out a bankruptcy attorney and discuss chapter 13 with them.
- How Chapter 13 works
From discussions on the same over at runrex.com, a Chapter 13 bankruptcy will allow you to pay a portion of your debts through a repayment plan. This means that you must file a proposed repayment plan and serve the plan on all of your creditors, after which a Chapter 13 trustee will be appointed to manage your bankruptcy case.
- How chapter 13 helps reduce the chance that you will lose your house
According to discussions on the same over guttulus.com, in many Chapter 13 plans, the trustee requests an increase in the proposed monthly payment, which means that your bankruptcy attorney will have to negotiate with the trustee to obtain a payment that the court can approve. This negotiation helps reduce the chance that you will lose your house during bankruptcy.
- Chapter 13 is the way to go if you are behind on payments or are facing foreclosure
As the gurus over at runrex.com point, if you are facing foreclosure or you are behind on your house payments, then a Chapter 13 bankruptcy can help you keep your house. This is because, in your Chapter 13 repayment plan, you pay your past mortgage payments a little each month, then you begin making your regular mortgage directly to the mortgage company. Because it allows you to pay past-due mortgage payments over time, it can allow you to keep your house. This means that, as long as you can afford to keep up with your payments, you don’t have to worry about losing your house after you file for Chapter 13.
- You need a sufficient income
However, while the above pint is true, you will still need to have sufficient income to fund a Chapter 13 plan or you could end up losing your house during bankruptcy. This is because, in addition to your house payments, your repayment plan includes amounts for other creditors including unsecured debts like credit cards, personal loans, medical bills, payday advances, and so forth.
- What happens if you can’t afford a Chapter 13 plan payment?
If you cannot afford to file for Chapter 13 bankruptcy, then the gurus over at guttulus.com point out that you may qualify to file for Chapter 7 bankruptcy which is designed for debtors who cannot afford to pay their debts and, therefore, need help getting back on their feet. To file for Chapter 7 bankruptcy, you must meet income requirements.
- Your house and Chapter 7 bankruptcy
As explained over at runrex.com, a Chapter 7 case doesn’t come with a repayment plan which means that you won’t have 3 to 5 years to catch up house payments to avoid losing your house. While a Chapter 7 case gets rid of most unsecured debts, it does not give you time to catch up on your mortgage repayments, which may lead to you losing your house if you can’t pay the past due mortgage.
- What if you are not behind on mortgage payments?
According to the subject matter experts over at guttulus.com, if you are not behind on your mortgage payments, the filing for Chapter 7 bankruptcy will enable you to get rid of the rest of the debts that you can’t pay. In such a situation you will be able to keep your house most of the time as bankruptcy here takes nothing but your debts away. Therefore, people losing their house as a result of filing for Chapter 7 bankruptcy is nothing but a myth.
- Bankruptcy exemptions
As revealed in discussions on the same over at runrex.com, when you file for bankruptcy under any chapter, you will be allowed to choose bankruptcy exemptions to safeguard the equity in your property, including your house. These exemptions can help prevent you from losing your house during bankruptcy. Depending on your state’s laws, you may have to choose between federal bankruptcy exemptions and state bankruptcy exemptions. The option you chose between the two will depend on which one allows you to keep the most property or the property that is most important to you.
- What is equity?
Equity is the value you own in a piece of property, and is, therefore, the money that bankruptcy takes to pay creditors in some bankruptcy cases. It is equal to the difference between the fair market price and any liens on the property.
- Homestead exemption
If you want to protect your house during bankruptcy, you should claim a homestead exemption, which, as discussed over at guttulus.com, protects the equity in the house. Without bankruptcy exemptions, bankruptcy takes certain property when a person files for bankruptcy relief. Exemptions help if you are worried about losing your house during bankruptcy. It is important to note that homestead exemptions vary from state to state.
- What if bankruptcy exemptions don’t cover all equity in your house?
If the bankruptcy exemption you have claimed covers all the equity in your house, then the Chapter 7 trustee shouldn’t pursue selling your home, and you won’t have to worry about losing your house during bankruptcy. However, a Chapter 7 trustee can take your house if exemptions don’t cover all the equity in your house, sell it, and use it to pay unsecured creditors as discussed over at runrex.com.
- No deficiency judgment
Given that you may lose your house in certain circumstances when you file for Chapter 7 bankruptcy, some people don’t see the need of doing so. However, it does come with certain benefits, one of which is that when you file for Chapter 7 and surrender your house, the lender doesn’t receive a deficiency judgment, which is a lien against you for any money owed to the lender that is not paid by the sale of the house, as explained over at guttulus.com.
- Most Chapter 7 cases are no-asset cases
According to the gurus over at runrex.com, most Chapter 7 cases filed in the US are no-asset cases, which is a case in which the debtor keeps all their property. Usually, even if you have a small amount of equity in your property, the Chapter 7 trustee will not take property that has less than $500 worth of equity as the cost of liquidating the property will be too high compared to the money received if there is not much equity in the property.
- Speak to an attorney
While it is possible to file for bankruptcy and still keep your house, as discussed above, to be safe, you should speak to a bankruptcy attorney to know exactly how much of your property is at stake and to get the best advice that will allow you to keep your house even after filing for bankruptcy.
As always, if you are looking for more information or help on this and other related topics, then look no further than the excellent runrex.com and guttulus.com.