Types of Bankruptcy

How Can I Keep my Home After Bankruptcy?

Keeping your home during bankruptcy is a major concern many of us face. Your family will need a place to live after bankruptcy, and if you own your own home, you may wish to keep it after filing. The fate of your home depends largely on what kind of bankruptcy you chose to file – either Chapter 7 or Chapter 13 personal bankruptcy.

What Happens to my Home in a Chapter 7 Bankruptcy?

The details vary state by state, but generally you may be able to declare a certain portion of your home equity as being exempt from your bankruptcy proceeding. This means that you can keep a certain amount of equity in your home, even after filing for Chapter 7 Bankruptcy.

The details are important, and you need to speak to a local attorney to determine your exact situation. The amount of your home that you can keep during a bankruptcy will depend on where you live, how long you have owned your home and the other details of your Chapter 7 filing. A local attorney can help you figure out how much of your home you can keep, and what to do if you own more equity than that number.

If you own more equity in your home than you are allowed to hold exempt during a Chapter 7, you may need to sell your home to pay off debt during your bankruptcy. Your attorney will need to examine your particular situation to guide you through this question.

What Happens to my Home in a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy is a different animal than a Chapter 7. In a Chapter 13, you’ll continue paying your debts, but you will negotiate new terms and a new payment plan. You may be able to use the tools available to you in a Chapter 13 to keep your home!

The key is whether or not you can come to terms with your mortgage lender on a payment plan. If your attorney can negotiate a payment that you can afford, then you may choose to keep your home and include the loan in your Chapter 13 payment plan. Many Americans decide to keep their homes through a Chapter 13, assuming they can afford the payments and they want to keep the home.

Consider whether it may be in your best interest to give up your home during your Chapter 13. You may decide that you are better off giving up the property and opting to rent or buy a less expensive home. But many of us like our living situation, and moving can raise all kinds of additional expenses. So if you are comfortable (both personally and financially) in your home, talk to your attorney about working it into your Chapter 13 payment plan.