Keeping Your House in Bankruptcy: 5 Things You Need to Know

Keeping Your House in Bankruptcy: 5 Things You Need to Know

Filing for bankruptcy can be a daunting prospect, especially when it comes to keeping your home. Many people wonder if a bankruptcy trustee can sell their home. In this article, we will answer that question and provide comprehensive information on the subject.

It's a common misconception that filing for bankruptcy means giving up most of your property. However, in most Chapter 7 and Chapter 13 bankruptcy cases, you have options for your home and vehicle. There are ways to keep your house and car while still receiving bankruptcy relief. With trusted bankruptcy advice, you can discover that filing for bankruptcy and keeping your house is possible.

Fortunately, many people can keep their homes and file for bankruptcy using exemptions. We will explain how exemptions work in this blog, but you can also use the calculator below to compare your equity with your state's allowable exemptions.

If you're interested in learning more, keep reading to find out about the following:

How to File Bankruptcy and Keep My House

If you're struggling to pay off your debts, you may be able to keep your house and car by claiming bankruptcy exemptions. However, figuring out the homestead exemptions can be a bit tricky. That's why we created a free bankruptcy exemptions calculator that can help you estimate the risk of losing your house based on your state's bankruptcy exemptions. Just enter your information and get an estimate in no time!

When you file for bankruptcy relief, you can use bankruptcy exemptions to protect some of your property from being used to repay your unsecured creditors. These exemptions apply to a wide range of assets, including your home, car, retirement accounts, clothing, tools of the trade, government benefits, and other personal property. To learn more about bankruptcy exemptions, check out this resource.

State Bankruptcy Homestead Exemptions

Have you ever wondered about the bankruptcy homestead exemptions in your state? Well, the answer lies in the Federal Bankruptcy Code. This code allows states to create their own bankruptcy exemptions, which can vary depending on where a person files for bankruptcy relief. In some cases, a person may be required to use state bankruptcy exemptions, while in others, they may have the option to choose between state and federal bankruptcy exemptions.

If you're unsure about the bankruptcy homestead exemptions in your state, we've got you covered. We've created a comprehensive bankruptcy homestead exemptions guide that you can check out to find out more information.

Federal Bankruptcy Homestead Exemptions

Let's take a look at the federal bankruptcy homestead exemptions and how they can help you keep your home.

It's important to note that state and federal bankruptcy exemptions offer different protections. For instance, while Florida's homestead exemption is unlimited, meaning your home is protected regardless of the equity, the federal exemption for a home is currently $25,150 (as of April 1, 2019). However, couples filing for joint bankruptcy exemption and both on the title to the home can double the federal homestead exemption, protecting up to $50,300 of equity in their home. It's worth noting that the federal bankruptcy exemptions are subject to review and adjustment every three years, with the next scheduled review for adjustment on April 1, 2022.

If you're wondering which states allow you to choose federal bankruptcy homestead exemptions, here's a list: Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.

But how can bankruptcy exemptions help you keep your home and car when filing for bankruptcy? Let's explore.

Can I File Bankruptcy and Keep My House and Car?

If you're considering filing for bankruptcy, it's important to know that you may be able to keep your house and car. However, it's crucial to understand the bankruptcy exemptions that apply to your situation. To estimate whether you can keep your house and car, you can use the bankruptcy exemptions calculator provided below.

To calculate the net equity in your home, you need to subtract your mortgage payoff and the total of other valid liens from the current fair market value of your home. For instance, if your home is worth $100,000 and you owe $80,000 on your mortgage, your net equity in the home is $20,000. But if you apply the federal bankruptcy exemption for homes of $25,150, your home's equity is protected from unsecured creditors if you file for bankruptcy relief. If you're married and both debtors are on the title to the home and file a joint bankruptcy petition, the homestead exemption doubles.

Before you file for Chapter 7 or Chapter 13 bankruptcy, your attorney will carefully analyze your property against the available bankruptcy exemptions. If there's a risk that you could lose property by filing for bankruptcy, your attorney will discuss the risk with you so that you can make an informed decision on how to proceed. In some cases, you might have alternatives to filing for bankruptcy to get rid of your debt.

If you're a senior and considering filing for bankruptcy, you may have some additional things to help keep your home. For instance, retirement income is generally untouchable in bankruptcy, and many retirees can avoid losing their homes by using the homestead exemption.

Remember, it's important to seek the advice of a bankruptcy attorney to help you navigate the complex bankruptcy process and make the best decision for your financial situation.

What if I Have Too Much Equity in My House?

If you're struggling with debt, you may be worried about losing your home. However, there are still options available to you. Let's take a look at how the process works.

Firstly, it's important to understand that the amount of equity you have above the exemption limit is a key factor in determining your options. However, regardless of your equity, there are still other options available to you. To help you navigate this situation, we've created a debt relief options comparison calculator. This tool will help you understand the different options available to you, as well as the costs and benefits of each.

If you're concerned about losing your home, you may want to consider filing for Chapter 13 bankruptcy instead of Chapter 7. With Chapter 13, you'll be able to keep your home, but it's important to note that the monthly cost to you will be a key factor. To help you estimate your monthly cost, we've created a free Chapter 13 calculator based on the official US bankruptcy forms.

Why Do Some People Lose Their Home When They File Bankruptcy?

When filing for bankruptcy, there are instances where you might lose your home. One such case is when you're unable to pay your mortgage payments, and filing for bankruptcy doesn't discharge the secured lien that your mortgage creates on your home's title. In such a scenario, you might have to surrender your home during bankruptcy.

But surrendering your home doesn't always have to be a negative thing. If you can't afford your home, surrendering it through bankruptcy can help you avoid a deficiency judgment. A deficiency arises when the foreclosure sale doesn't pay off your mortgage in full, and you still owe the mortgage company money even though it took your home. By filing for bankruptcy, you can avoid or get rid of deficiency judgments.

In some cases, you might lose your home in bankruptcy if the bankruptcy exemptions don't cover all the equity in your home. In such scenarios, the Chapter 7 bankruptcy trustee might sell your house and use the equity not protected by exemptions to pay unsecured creditors. The trustee will first pay off the mortgage debt in full, followed by payment of the homestead exemption to the debtors, and any remaining proceeds will go towards paying unsecured creditors.

Will I Lose My House if I File Chapter 13?

Are you worried about losing your home due to bankruptcy or missed mortgage payments? Filing for Chapter 13 bankruptcy might be the solution you need to keep your home.

Chapter 13 bankruptcy is a reorganization process that allows you to repay some of your debts through a bankruptcy plan. You can catch up on past-due mortgage payments over time, which can help you keep your home. Additionally, if your homestead exemption exceeds the maximum bankruptcy exemption, you can pay an extra amount to your unsecured creditors through your bankruptcy plan. By paying a little extra each month, you can keep your home while repaying your debts.

It's important to note that continuing to make mortgage payments throughout the plan is crucial. If you stop making payments, the stay may be lifted, and your creditors may try to collect on that debt. Don't risk losing your home - consider Chapter 13 bankruptcy to help you keep it.

Will I Lose My Home If I Am Currently Behind on My Mortgage?

It's a common misconception that declaring bankruptcy will automatically stop foreclosure on your home. However, the reality is more complex than that. If you're currently behind on mortgage payments and facing foreclosure, you should check out our comprehensive guide on "Does Bankruptcy Stop Foreclosure?"

This article delves into the intricacies of how your home is treated in the bankruptcy process and what options you have to potentially save it from foreclosure. It's an essential read for anyone facing financial difficulties and looking for a way to protect their home.

In addition to keeping my house, what are the costs and pros and cons of bankruptcy?

Bankruptcy can be a difficult decision to make, and it's important to weigh the pros and cons before choosing this option. If you're considering bankruptcy, you may want to review the pros and cons of bankruptcy.

Whether you have a lot of equity or very little equity in your home, you can use our free debt relief options calculator to compare your options, their costs, and the pros and cons. This will help you make the most informed decision possible.

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