In short, your home is probably safe. It is important to note that your homestead exemption can only be applied to one property. All that being said, without any mortgage or liens on your property, it is very possible that the calculations above will result in a positive number. In this case, the bankruptcy trustee may decide to use the equity to pay off your unsecured creditors. To do this, the trustee will likely sell the home, give you the dollar amount of the homestead exemption, and pay off creditors with the remaining funds.
So, if you own your home free and clear, filing a bankruptcy may not be the best path towards lasting debt relief. Upsolve Community Member My house is paid off. If I file chapter 7 can they take my I would like to keep my car You can use the same calculations as above to determine whether or not your home is at risk.
Subtract your homestead exemption from any equity. If after all of these deductions, you still have a positive dollar amount, your home may be at risk.
If, however, there is no remaining equity, you will likely be able to keep your home. But there are a few other factors to consider. In order to file Chapter 7 bankruptcy and keep your home, you must be current on your mortgage, or be able to bring it current shortly after filing. Otherwise, you may lose the home to foreclosure.
If you wish to file Chapter 7 bankruptcy and keep a property for which you have fallen behind on monthly payments, you may be able to negotiate with your mortgage company before filing. If your lender agrees to modify your loan or refinance to resolve arrears, you can bring the mortgage debt current. However, it is essential to complete this before filing, as bankruptcy proceedings could disrupt the loan modification or refinancing process.
If your lender does not agree to resolve the back mortgage payments, pre-bankruptcy, you may wish to consider filing Chapter 13 bankruptcy instead. In Chapter 13, debts are reorganized into a three-to-five year repayment plan, and mortgage arrears can be included in this plan.
But in order to qualify for a Chapter 13 bankruptcy, you will need to show that you have sufficient monthly income to afford the plan payments.
Furthermore, excessive unsecured debts, such as student loans and medical bills, may make you ineligible for Chapter But there is a solution. Filing Chapter 13 To Save Your Home If you are behind in your mortgage payments, Chapter 7 will not work, unless you wish to surrender the home or pursue a loan modification. Email Brian G. Can I Keep My Car?
Asset Protection. Our phones are currently down due to a power outage. Menu Search Contact Attorney. Search for: Search :. The point of bankruptcy is to get a fresh start and that is only possible if the debtor has something to start with.
In addition, used household goods and personal effects have little resale value, and so do not represent a real source of value to repay creditors. Congress created a set of exemptions in the bankruptcy code but allowed each state to opt-out of those exemptions in favor of state law exemptions. Sixteen states allow debtors to choose between federal and state exemptions.
The other 34 states require use of their own exemptions. For example, say you were born and raised in North Dakota. On January 1, , you moved to Arizona. So, you have to look back two years to May 1, and use the exemptions of the state you lived in for the six months prior to that date. Note that exemption amounts refer to your equity in the asset.
If you co-own the asset, only your share of the equity is relevant. If an asset is subject to a mortgage or a lien, your equity is the value of the item after deducting the amount of the lien or liens the equity. Exemptions are meant to ensure that you have the necessary means to live and work. They protect the debtors from creditors who might otherwise seize everything and leave the debtor destitute.
While each state has its own exemption rules, there are several major exemptions offered by most states. Some assets are completely excluded from the bankruptcy process by federal law.
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