Many people neglect to even consider bankruptcy because they're concerned about losing their home. While it's a legitimate concern, there is no guarantee you won't be able to stay in your home after your bankruptcy filing is complete.
There are three points of emphasis to consider:
- The type of bankruptcy: Generally speaking, Chapter 7 exemptions are less flexible than Chapter 13. So, if you want to increase the likelihood of keeping your home after bankruptcy, you should consider if Chapter 13 would work for you.
- The amount of equity: With Chapter 7, for example, the bankruptcy trustee focuses on how much equity you have in your home, not what it's worth. Since many people filing for bankruptcy have little equity or are underwater, their property is exempt. The thing you want to watch for is if you have more equity than the exemption allows.
- The cost of your mortgage: Don't forget about this. If you can't afford your mortgage payment before bankruptcy, it doesn't necessarily mean you can't afford it after. But it's definitely something to look into.
These factors all come into play in regard to whether you can keep your home in bankruptcy.
If you're interested in filing for Chapter 7 or Chapter 13 bankruptcy, learn more about the process, the benefits and the potential drawbacks, which can include losing your home and other assets.
With a clear idea of how the process works and the steps you can take to protect yourself, it's easier to make a confident decision and proceed at the right time.