Hello, my name is Quianna Ridalgo. I enjoy talking to others about bankruptcy case outcomes. Court officials handle each type of debt, from credit cards to home loans, differently. Debtors must carefully prepare themselves for the court proceedings to cope with the outcome appropriately. The way creditors handle the discharged debt also interests me. Bankruptcy attorneys assist their clients with each step of the bankruptcy process from filing paperwork to meeting with creditors. Debtors and creditors both receive counsel that helps them move forward appropriately at every point in the case. The information I share on my site may help you learn about everyone's role in these complex cases. Feel free to come by anytime to learn more information about this interesting subject.
If you are considering filing for some financial relief using a Chapter 7 bankruptcy, you will need to take into account how it can affect your home loan. Mortgages are a special type of bankruptcy debt, and what happens after you file depends on two major factors. Read on to find out how your payment status and exemptions can affect your home loan.
You Don't Have to Lose Your Home With Bankruptcy
Chapter 7 can cause some filers to lose property. However, most don't end up doing that because of the below factors. Your home, vehicles, and other personal property are often safe from seizure. You may not necessarily lose your home as long as the two factors discussed below come together in a positive way. It's vital to discuss your financial situation with a bankruptcy lawyer before you make the filing decision so that no surprises await you in regard to your home or any other property.
Are You Behind on the Mortgage Payments?
Mortgages are known as secured debts since the loan uses the home as collateral. That means your home can be foreclosed on when you fall behind on payments. While filing Chapter 7 can freeze any such foreclosure actions, the lender can once again take action once the automatic stay expires. Whether you are behind when you file or not, avoid viewing the automatic stay as an opportunity to drop your responsibility for your mortgage. With your lawyer's approval, make your mortgage payments and get caught up on any in arrears. Once you file, you may be able to more easily do that since you are no longer having to pay other types of debt like credit cards, medical debt, and more.
Use Your Bankruptcy Exemptions to Keep Your Home
If your mortgage is caught up, you should turn your attention to your exemptions. Each state allows homeowners a certain amount of exemptions covering their primary residence. In some states, the homestead exemption allows you to keep a property no matter its value. In other states, you may deduct a certain sum of money from the value of the home. Remember to consider the value of the home as the appraised value minus your mortgage balance. If your home is worth $250,000 but you owe $200,000 on the mortgage, the value for bankruptcy purposes is only $50,000.
Get with a Chapter 7 bankruptcy lawyer and have them explain the way your mortgage balance and your state exemptions influence your chances of keeping your home.Share