Keep your home in bankruptcy

Can you keep your home in bankruptcy?  It is a common question posed by potential bankruptcy clients.  And the common answer to this question is yes.  You can keep your home in bankruptcy.

houseBankruptcy laws allow you to protect, or exempt, your property when you file for bankruptcy.  You do not have to lose or surrender your possessions in seeking bankruptcy protection from your creditors.  This means you can keep your home in bankruptcy and still eliminate your debt.  There are limits, though.

To keep your home in bankruptcy there are limitations on the amount of equity you can protect.  Depending on your individual bankruptcy situation sought, there are limits on the amount of equity you can have.  Typically, you can keep more equity in your home if you are married, are older or even if your income is lower.  So, too, the more you own in other forms of property can lessen the amount of equity allowed.  cars, cash, and bank accounts are examples of property that may limit the amount of equity to keep your home in bankruptcy.  Each individual bankruptcy case is different.

If you can protect, or exempt, all the equity in your house, you can still file bankruptcy and eliminate all your debt.  This is often the case in a Chapter 7 bankruptcy.  If filers can protect all the equity in their home, they can often eliminate all their debt through a Chapter 7 bankruptcy.

Even if you have more equity in your home than the law allows you to protect, you can still keep your home in bankruptcy if you repay some of your debt.  This is often the case in a Chapter 13 bankruptcy.  A Chapter 13 bankruptcy provides for repayment of your debt, even if only a percentage of your debt is repaid.  And for each dollar you repay to your creditors, you can keep and extra dollar of equity in your home.  If for example, you have $151,000 equity in your residence, but are only allowed to protect $150,000 in equity, you can still keep your home in bankruptcy if you pay $1,000 back to your creditors.  It’s that simple.

Bottom Line

As indicated, each bankruptcy filing and case is unique.  Consultation with a bankruptcy professional is a must in this situation.  But bottom line, as this Washington Post story points out, know that you can keep your home in bankruptcy.

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