One of the biggest concerns people have when they consider filing for bankruptcy is whether they will lose their home. In many cases, it is this fear that holds people back from filing for bankruptcy – even though the fear is unfounded and they could be getting relief from their overwhelming debt.
How your personal property is affected depends on the type of bankruptcy you choose. One type will actually help you save your home if it’s on the brink of foreclosure, and another type may let you keep your home while liquidating many of your debts. It’s important to talk with your bankruptcy attorney to know what your options are and how they will affect your home.
Here’s what you are likely to learn:
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is usually referred to as a “debt restructuring plan” or a “wage earner’s plan.” This type of bankruptcy looks at what you owe and what you are able to pay, and it creates a 3- to 5-year repayment plan. You end up paying less in interest and penalties, and some of your debt may be discharged at the end.
If you’re home is on the brink of foreclosure, filing for Chapter 13 bankruptcy may save it. Your missed mortgage payments can be added to your bankruptcy repayment plan, helping you to catch up on your mortgage and save your home from potential action. Bankruptcy cannot save your home if foreclosure proceedings have already begun.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy allows you to liquidate unsecured debts like credit cards and medical bills. However, you have to meet a series of requirements to be allowed to file for Chapter 7 bankruptcy, so it’s not for everyone.
Filing for Chapter 7 bankruptcy won’t save your home from foreclosure, nor will it discharge your late house payments. However, you may not be worried about discharging debt on your home; instead, you may be worried about whether your home will be seized to satisfy your debtors if you file for bankruptcy. Fortunately, Chapter 7 bankruptcy allows you to exempt a certain amount of equity in your home. Unless you own your home outright or have significantly paid down on the mortgage, chances are good that the equity in your home will fall within the exemption.
The amount will vary, depending on whether you are single or married and other criteria. Talk to your bankruptcy attorney about the exemptions and whether you meet them.
Filing for Bankruptcy
It’s important for you to identify your goals when you are considering whether to file for bankruptcy and what type to choose. If you are trying to get rid of unsecured debt but own a home and are worried about losing it, you may want to talk to a Chapter 7 bankruptcy lawyer about how you fit within the income guidelines and property exemptions. It may be that you can get maximum debt relief without having to worry about losing your home.
However, if you own a home and have fallen behind on the payments, you may want to talk to a Chapter 13 bankruptcy attorney about how a debt restructuring plan may benefit you. You can save your home from foreclosure and get a better handle on your debts in the process.
Each bankruptcy type offers benefits that can give you great relief from debt. You need to balance those benefits with the assets you have to determine the right plan of action.
Gilbert Bankruptcy Lawyers can help you explore your bankruptcy options and decide which one would give you the best results. A bankruptcy attorney from our Gilbert team will thoroughly review your finances, including a complete list of your debts and assets, all your sources of income, and your credit history, and will make tailored recommendations to help you get maximum debt relief with the least negative side effects. We can help you put a stop to wage garnishments, harassing phone calls, and other debt collection measures now. Call us now to schedule an appointment with an experienced Gilbert bankruptcy lawyer to learn more about your options. Our attorneys also represent businesses who are interested in Chapter 13 bankruptcy.