Summary: Bankruptcy laws may allow you to keep your house depending on type of bankruptcy.
From Yahoo Finance: 2024-12-30 12:55:00
Bankruptcy filings in 2023 exceeded 450,000 according to data from the Administrative Office of the US Courts. Concerned about losing your home if you file for bankruptcy? Laws may protect your home, depending on the type of bankruptcy you file and your home equity.
Chapter 7 bankruptcy, or “liquidation bankruptcy,” helps those overwhelmed by debt. You can protect assets like your home, car, and retirement savings through exemptions. To keep your house in Chapter 7, file a homestead exemption.
Homestead exemptions protect home equity during bankruptcy. You can generally keep your home if your mortgage balance exceeds the home’s market value. State laws vary, so consult a bankruptcy lawyer. Some states have unlimited homestead exemptions, while others have lower limits.
Chapter 13 bankruptcy allows for a debt repayment plan lasting three to five years. You can keep your home by staying current on mortgage payments or catching up during the repayment plan. Homestead exemptions also apply to Chapter 13.
It is possible to keep your home during bankruptcy, depending on your state’s laws and the type of bankruptcy filed. Chapter 7 requires current mortgage payments, while Chapter 13 allows catching up during a repayment plan. The type of mortgage and credit score post-bankruptcy impact future homeownership options.