Bankruptcy Attorney | What Happens to My Property?
Bankruptcy Attorney . One of the leading questions in the bankruptcy process is, what happens to my property in bankruptcy? In most cases, property is protected in bankruptcy unless a borrower has significant assets that are not covered under bankruptcy exemptions.
Regardless of where a debtor lives, there are certain exemptions offered by either the state or under federal bankruptcy statutes which are designed to protect homeowners.
Chapter 7 Bankruptcy and Your Mortgage
Homeowners who pass the Chapter 7 means test may be able to exempt their home from potential liquidation. Unless a homeowner has significant equity, there are homestead exemptions which allow them to exempt specific amounts. The federal homestead exemption is $23,675 for a single bankruptcy filing and $47,350 for a joint filing. Some states may offer exemptions of as much as $100,000. It is important to discuss your state laws with your bankruptcy attorney.
For most debtors who are eligible for Chapter 7, the bigger concern is whether or not they wish to stay in their home; high mortgage payments, adjustable rate mortgages and other factors may have an impact on their decision.
Your Home and Chapter 13 Bankruptcy
Under Chapter 13, borrowers will be able to keep their homes provided they remain current on their mortgage payments. Keep in mind, Chapter 13 is a reorganization of debt. This is good news for homeowners who may be behind on their mortgage payments. In effect, the court would allow the homeowner to pay back mortgage arrears over as many as five years provided they can still meet the monthly mortgage payments.
However, if you have significant equity in your home, unless that equity can be exempted, your creditors could be getting a higher payoff over the term of your Chapter 13 repayment plan. Keep in mind, your homestead exemption applies only to your home and not to other property that you may own. You should also know whether or not your state offers a wildcard exemption that may help you keep your home in the event you have more equity than the homestead exemption covers. If your state follows federal exemptions, you are entitled to $1,250 as a wildcard.
Understanding Your Mortgage Options
Before filing for bankruptcy it is important to make sure you wish to remain in your home. A high monthly mortgage payment could result in you falling behind on your payments again which could put you at risk for foreclosure. In many states, this could also mean you are facing a deficiency judgement if your lender sells your home for less than what you owe. A bankruptcy may also result in your lender being less willing to modify your existing mortgage. A borrower who is considering attempting to negotiate with their lender should do so before they file bankruptcy. Lenders may be more willing to consider refinancing the loan or modifying the current loan terms prior to filing.
In addition to your home, there are other assets that are generally protected in bankruptcy including retirement accounts and pensions. As someone who is considering bankruptcy, you should make sure you fully understand the potential exemptions. You should also understand how these exemptions will impact your home, car and other assets. An experienced bankruptcy attorney can help explain and answer any questions you may have. -startfreshtoday
Worried about what may happen to your property if you file bankruptcy? Contact a professional. Contact bankruptcy attorney, Pinkston & Pinkston.