If I Want To Keep My House, Should I File For Bankruptcy?
When a homeowner is struggling with debt, it can be difficult to know whether filing for bankruptcy is the right decision. More precisely, you might be wondering: if I want to keep my house, should I file for bankruptcy? Depending upon the type of bankruptcy for which you are eligible, a bankruptcy filing could actually help you to keep your home. However, it will be important to learn about the differences between liquidation and reorganization bankruptcies for purposes of staying in your house after a bankruptcy case. You should seek advice from an experienced West Palm Beach bankruptcy attorney. In the meantime, the following information can help to clarify whether filing for bankruptcy is likely to give you an opportunity to keep your house or whether it could result in the need to give up your home.
Reorganization Bankruptcy Can Help a Debtor to Keep Their Home
If you are planning to file for a reorganization bankruptcy under the U.S. Bankruptcy Code, you should know that debtors often are able to keep their homes even if they are going into foreclosure with help from a reorganization bankruptcy. Both Chapter 13 and Chapter 11 are types of reorganization bankruptcy, although Chapter 13 is the more common type of reorganization bankruptcy for individual consumers.
How does a reorganization bankruptcy actually help a debtor to save their home? In this kind of bankruptcy case, the automatic stay will initially stop any foreclosure actions from occurring, even if the bank is in the process of foreclosing on the home. Then, through the process of reorganizing debts, the homeowner is able to get caught up on mortgage payments by the end of the repayment plan. Accordingly, if you want to keep your home—even if you are behind on mortgage payments—a reorganization bankruptcy is often a solution. However, your situation will likely be more complicated if you are ineligible for Chapter 13 or Chapter 11 bankruptcy and need to file for Chapter 7 bankruptcy.
You May Be Able to Keep Your House in a Liquidation Bankruptcy
If you are planning to file for Chapter 7 bankruptcy, you may know that this is a type of liquidation bankruptcy. What that means is that your non-exempt assets will be liquidated in order to pay creditors, and so that you can have eligible debts discharged. How will a liquidation bankruptcy affect your house?
If you own your home outright (meaning that you do not have a mortgage and do not owe the bank money for your home), you can exempt all of the equity in your home through Florida’s homestead exemption. Accordingly, if this is your situation, you will not need to give up your house if you file for Chapter 7 bankruptcy. However, the situation will become more complicated if you have a mortgage. If you are not behind on your mortgage payments, you may be eligible to reaffirm your mortgage debt and stay in your house. Otherwise, you will likely be unable to keep your house in your Chapter 7 bankruptcy case.
Contact a West Palm Beach Bankruptcy Lawyer
If you have questions about bankruptcy and your mortgage, or about keeping your house in a consumer bankruptcy, one of the experienced West Palm Beach personal bankruptcy attorneys at Kelley Kaplan & Eller can assist you.
Sources:
law.cornell.edu/uscode/text/11
leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222ContentsIndex.html
