For those facing financial hardships, the prospect of filing for bankruptcy raises questions about the fate of their most significant asset—their home. The process of bankruptcy involves navigating complex legal and financial terrain.
Understanding whether one can retain his or her home after filing for bankruptcy is an important aspect.
Chapter 7 bankruptcy
In a Chapter 7 bankruptcy, the liquidation of assets is a central component. However, there are certain exemptions in place to protect certain property, including your home. The determination of whether you can keep your home in Chapter 7 bankruptcy hinges on certain factors, such as the equity in your home and the applicable state exemptions. Your ability to continue making mortgage payments is also a determining factor. According to Fox Business, most people who file for personal bankruptcy end up filing for Chapter 7.
Chapter 13 bankruptcy
Chapter 13 bankruptcy offers an alternative for homeowners looking to retain their property. Unlike Chapter 7, Chapter 13 involves creating a repayment plan to satisfy creditors over a specified period. This allows homeowners to catch up on mortgage arrears while maintaining their regular mortgage payments. Completing the repayment plan can lead to retaining home ownership, making Chapter 13 a viable option for those looking to secure their residence.
Chapter 7 and Chapter 13 bankruptcy offer distinct paths, each with unique considerations for homeowners. By taking informed actions and considering your options carefully, you can chart a path forward that maximizes the chances of retaining your home despite bankruptcy’s challenges.