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Bankruptcy House Information: Will I lose my home if I file bankruptcy?
It’s common to ask what happens with bankruptcy and your home. So here we provide bankruptcy house info. Understandably, there is concern about what happens to your house if you file bankruptcy. Assuming you stay current with your mortgage, your home may be safe. (if not current, a bankruptcy can help with stopping foreclosure).
In California, you are allowed to protect your home in a bankruptcy depending on how much equity you have. Other factors are your marital status and even your age. You will want to contact a lawyer for advice. Contact us and we’ll help if you are in the Greater Los Angeles / SoCal area).
The Chapter Matters
It matters what bankruptcy you file 7 or 13. Why? Because bankruptcy house actions happen in different chapters.
Chapter 7 bankruptcy and House
It is possible to keep a house in Chapter 7, but two things must happen. Firstly, if you file Chapter 7, home payments must be current and stay current. Don’t file chapter 7 if you’re late to stop house foreclosure. Secondly, you have to have a home exemption big enough to cover your home equity.
Chapter 13: bankruptcy home option to save it
File bankruptcy under Chapter 13 if either of the two above issues are around, and you can save a home. Firstly, if you’re not current, a Chapter 13 bankruptcy can help you get current. Secondly, if you have too much home equity to be covered by a house exemption, you can still keep it in Chap 13. Thirdly, you have to be able to make bankruptcy payments. And fourthly, these payments may be higher based on your home equity. Generally speaking, a Chapter 13 bankruptcy is a better house bankruptcy, but you must have positive cash flow to make it work.
Homestead and Exemptions
California has pretty generous laws about what they allow you to keep in a bankruptcy. These allowances are exemptions. One of these relates to the house you own. The California Homestead Exemption can save your home without being forced to sell it to pay creditors and debts.
If you have home equity, you could lose your home in Chapter 7 bankruptcy. Many people keep theirs, but there has to be careful planning. What about liens? Do you really know your home value? When’s the last time a house on your block sold? Do your homework and you’ll keep your house in bankruptcy.
Walk away? Or catch up in arrearages payments? Whatever your goal is, we can help you start over. Contact us now!