If you have made the decision to file chapter 7 bankruptcy, you may be justifiably concerned about losing your home. Chapter 7 bankruptcy carries with it the potential for property losses. While it doesn't happen to everyone, some filers may have to surrender their vacation home, vehicles, boat, and even their primary family residence. It doesn't necessarily have to happen that way, though. Read on to find out how you can get through your chapter 7 bankruptcy and keep your family home.
Don't Get Behind on Your Secured Debt Obligations
Consumers carry two types of debt: secured and unsecured. Homes often have mortgages and bankruptcy can protect consumers against certain foreclosure actions. They can only do so much for so long, however. Once the automatic stay is lifted, creditors can take action if the consumer owes money. It's extremely important to stay current on your home loans so that you won't lose the home not to bankruptcy but to the creditors.
Find Out How Much Equity You Have
The value of a home is very much central to whether not you will be allowed to keep it. To determine the value, however, you must find out how much equity you have in the home. Equity is the value of the home as determined by a professional appraisal with the mortgage balance deducted. That is the number you will need as you check your state's homestead exemption list.
Determine Your State's Homestead Exemption
Each state has its own way of dealing with exemptions. Some states allow the primary residence to be completely exempt from forfeiture no matter how much it's worth. Most states, however, allow a certain amount of the home's value to be exempt. To further complicate matters, some states allow filers the choice of using either state or federal exemptions. Also, if you have recently moved, you may have the option of using your previous or your current state of residence to determine your exemptions. Finally, if you are married and filing bankruptcy jointly, you may, in some states, double your homestead exemption.
Even if your home equity exceeds the state exemption, you may not necessarily lose your home. You may have options that include paying the bankruptcy courts using other property or cash so that you can keep your home. In some cases, the equity is so small that the trustee won't bother with the expense and trouble of trying to resell it. Finally, some states give filers a wildcard exemption that can be used for any property. It's important that you speak to your bankruptcy lawyer about any of the above.
For more information about working with a bankruptcy law firm, contact a local bankruptcy attorney.