A lot of consumers who are thinking about bankruptcy are wondering if they will lose their home after filing. Many issues can arise during Chapter 7 bankruptcy. However, you may not lose your home if there is exempted equity and you can continue to make payments. You don’t need to lose your family home. Speak with a reliable bankruptcy attorney in Charleston, WV to help you with your case. Your attorney will assess your current financial situation and exemptions to potentially keep your home and still eliminate your debt.
What to Expect when you File for Chapter 13 Bankruptcy
If you file for Chapter 13 bankruptcy, you can keep all your property. This bankruptcy allows you to enter into a payment plan with the courts that appoint a trustee to oversee your assets. Under this plan, you are expected to make the monthly payments in full and on time. Often, this plan takes 3-5 years, but after you complete the payment plan, you will be out of bankruptcy and you still own your property.
What Happens When You File Under Chapter 7?
If you opt for Chapter 7 bankruptcy, you don’t need to repay your debts. Rather, the courts will discharge your debts; however, they will require you to give up your possessions that is not exempt. A trustee will collect your assets and sell them. Some secured debts such as furniture, car, and home can be kept. However, these debts need to be reaffirmed. You will have to sign a Reaffirmation Agreement. After signing, you can’t file bankruptcy on these items for eight years. Also, you should meet the payment obligations just as you were before you file for bankruptcy.
As a homeowner, you must first take into account if you can afford your mortgage payment. You should also repay any back-owed payments before the debt can be reaffirmed. Therefore, if you are four months due on your mortgage, you need to make the four months’ worth of payments first and sign the reaffirmation agreement with your lender.
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How Else Can You Protect Your Home?
A homestead exemption protects your home from seizure by creditors after you declare bankruptcy. Once your mortgage is reaffirmed, this exemption protects your equity. If the equity of your home exceeds the exemptions, the trustee can liquidate the house and distribute the proceeds. Thus, you must have your bankruptcy lawyer assess your equity situation. However, you are entitled to the value of the exemption in this asset after liquidation.