How Bankruptcy Can Help You Keep Your Home
Some people believe that bankruptcy forces you to give up your home, but this is not always true. In some cases bankruptcy can actually prevent, or delay, foreclosure. Let’s see under what circumstances bankruptcy can help you keep your home.
Want to speak to an experienced bankruptcy lawyer in the Baltimore area? Get a free initial consultation with Sirody & Associates now. Call (410) 415-0445.
Chapter 13 Bankruptcy And Foreclosure
If you are facing foreclosure, filing for bankruptcy may actually allow you to keep your home even if you are behind on your mortgage payments. In Chapter 13 bankruptcy, your debts are paid back under a payment plan which can last from three to five years. Your late unpaid mortgage is also paid back under specific terms, and this is referred to as mortgage “arrearage.”
Chapter 13 requires you, however, to be able to cover your current mortgage and basic living expenses while also meeting the requirements of the payment plan. If you are able to make all your payments, then you can keep your home. All remaining mortgage payments must be completed after bankruptcy as well.
Chapter 7 Bankruptcy And Foreclosure
In Chapter 7 bankruptcy, your debts are paid off by the sale of nonexempt assets in agreement with your creditors. This process is managed by a trustee appointed to your bankruptcy case. Bankruptcy will delay foreclosure if you are behind on your mortgage payments (see below). If your payments are up to date, you may be able to keep your home under certain circumstances. Under the homestead exemption a certain amount of equity in your home is protected under federal and/or state guidelines.
After subtracting for the homestead exemption, if your remaining equity is minimal, you will probably be able to keep your home. There are costs associated with the sale of a house, and if little is left over after the sale, then nothing is left to pay your creditors. A qualified bankruptcy lawyer can help guide you through this process and make certain that you get the maximum legal exemption. In some cases, it may be better to use the equity you have in your home to help pay off your debts.
If you are behind on your mortgage payments, filing for Chapter 7 will delay the foreclosure process. Some people use this time to make other living arrangements. Once the bankruptcy process is completed, foreclosure will continue, and you may have to give up your home.
No matter what your situation, bankruptcy is a way to get a new financial start. You may or may not be able to keep your home, but in any case your debts will be handled in a fully legal process that protects your rights. Sound advice from a bankruptcy lawyer makes sure that all regulations are met so you can move on with your life.
Want to know if you can keep your home by filing for bankruptcy? Then contact Sirody & Associates now.