Published: Friday, 20 July 2012 14:08

“Will I lose my home if I file for Bankruptcy?

The first question many people want answered is, “Will I lose my home if I file for Bankruptcy?” The good news is most people who file for Bankruptcy do NOT lose their home. If you owe more on your residence than it is worth (no equity), then it is protected from your creditors by the United States Bankruptcy Code. More specifically, under these circumstances your home is protected by the “homestead exemption” and is said to be legally “exempt” from creditors. If your home is exempt from your creditors, you may keep your home even if you file for Bankruptcy.

Even if your residence is worth more than what you owe on it (equity), your home may still be protected as long as the amount of equity isn’t higher than the exemption amount for a residence by law, which is currently $35,000 per person. For example, if you and your spouse file for Bankruptcy to save your home, and both of you are on title to the home (you both own it), the law protects up to $70,000 of equity in your home from creditors. Therefore, if the equity in your family’s residence is below $70,000, you may file for Bankruptcy and keep your home.

Is it possible to stop a foreclosure and catch up on my mortgage by filing Bankruptcy?

Yes. If you file for Bankruptcy in time, the foreclosure action will be halted and you will have an opportunity to save your home. Chapter 13 Bankruptcy grants you the opportunity to repay your mortgage arrears payments over time and catch up on your mortgage. This type of Bankruptcy is a life saver for many hard working Americans who have fallen behind on their mortgage due to losing a job, or struggling with unexpected medical bills, or perhaps going through a divorce. If you have fallen behind on your mortgage and are suffering the stress that accompanies the foreclosure of your home, there is hope. We are only a phone call away.

            Thank you for reading our blog! We encourage you to call our office to schedule a consultation to discuss your options with an attorney. In our next blog, we’ll discuss the possibility of reorganizing your financial position by eliminating your entire second mortgage or equity line of credit by filing for Bankruptcy.

                                                                                        By James Price