It’s the American dream to own a home -; but all too often, that dream ends in disappointment and financial difficulty. Going bankrupt does not always mean losing your home; in many cases, you can keep your house after a personal bankruptcy filing. If you choose Chapter 7, however, retaining ownership of your home is dependent upon the amount of equity you possess.
Homestead Exemption
During a Chapter 7 Filing With Chapter 7, the court-appointed trustee sells your assets and disburses the money to your creditors. If your home is worth $350,000 and you owe $350,000 on your mortgage, your home is safe. If you have no equity, the trustee is not motivated to sell your home. Even if you only owe $340,000 on your mortgage, the court cannot sell your house and give the difference to creditors because of a federal homestead exemption rule.
Can You Save Your Home with a Chapter 13 Filing? During a Chapter 13 case, you and the court work together on a plan to repay your debts. Every month, you give all of your disposable income to the court-appointed trustee. Rather than liquidating your assets, the trustee disburses your monthly payment to your creditors. If you are trying to catch up on your mortgage, you can include your overdue amount in the debt covered by the payment plan.
Bankruptcy and Your Mortgage
Filing for bankruptcy does not make a mortgage disappear. If you choose Chapter 7 and the trustee does not sell your home, you do not get to remain there unless you stay current on your mortgage payments. You and an Expert Bankruptcy Lawyer will have to work with your lender to enter a new mortgage contract through the local bankruptcy court.
Eliminating Back Property Taxes Through Bankruptcy
Both Chapter 7 and Chapter 13 can eliminate any property taxes owed on your home. In Chapter 7, your taxes are discharged like any other kind of debt. In Chapter 13 filings, your delinquent taxes are included in your repayment plan.
An Expert Bankruptcy Lawyer can Help
The laws concerning personal bankruptcy and home ownership are complex, and your case is different from any other. We’ve given some very general information above, but it should not be construed as legal advice. For detailed information specific to your case, please call a Law Margulies Expert Bankruptcy Lawyer as soon as possible.
