Six Things That Consumers Who Own A Home Should Know About Bankruptcy
One of the biggest fears of homeowners who go through bankruptcy is that they will lose their homes. Fortunately, people can often keep their homes despite a bankruptcy filing.
The following are six things that homeowners should know about bankruptcy.
Filing for any type of bankruptcy will lead to an "automatic stay" that stalls the foreclosure process.
One thing about filing for bankruptcy that can give homeowners some initial relief is that a bankruptcy filing triggers an "automatic stay". This automatic stay will at least temporarily halt the foreclosure process until details of the bankruptcy are worked out.
A Chapter 13 bankruptcy filing is sometimes best for homeowners.
The type of bankruptcy filing that is usually chosen to prevent the loss of a home is Chapter 13 bankruptcy. Those who own homes and file for Chapter 13 bankruptcy are usually able to keep their home.
Homeowners may keep their homes with a Chapter 7 filing in some cases.
In some cases, homeowners who file for bankruptcy can keep their homes despite a Chapter 7 filing. This can happen when the homeowner doesn't have a large enough amount of equity in their home for the sale of their home to help significantly with outstanding debts.
Homeowners can also sometimes keep their home after a Chapter 7 filing thanks to what's known as the homestead exemption. The homestead exemption varies by state and makes it so that a certain amount of equity in a consumer's home is protected in a bankruptcy filing.
You'll be expected to catch up on mortgage payments to keep your home with a Chapter 13 filing.
Although a Chapter 13 bankruptcy may allow a homeowner to keep their home, it's important to realize that they will be expected to catch up with outstanding mortgage payments.
You can lose a home after a Chapter 13 filing if you fail to keep up with payments.
Failing to keep up with mortgage payments after devising a payment plan with the court could result in someone losing their home even after a Chapter 13 bankruptcy filing.
You should consult with a bankruptcy attorney to determine the best strategy for saving your home.
Every bankruptcy is different. It can be difficult for a consumer to determine the best type of bankruptcy filing to protect a home. That's why it's so important for homeowners to work with a bankruptcy attorney before making any decisions about their bankruptcy filing.
For more information, contact a bankruptcy lawyer in your area.
