Keeping a home while filing for bankruptcy
Florida residents who are applying for bankruptcy may be able to keep their homes. Bankruptcy allows exemptions for some property. However, keeping the home will depend upon several factors. One of those is whether an individual files for Chapter 7 or Chapter 13 bankruptcy. The latter allows more exemptions.
However, if people are unable or unwilling to apply for Chapter 13 bankruptcy, they still may be able to keep their home with a Chapter 7 filing. The bankruptcy trustee looks at the equity that is in the home to determine if the home is exempt in a Chapter 7 filing. Equity is the balance of any home equity loans or mortgages subtracted from the home’s market value. The homes of people who are in negative equity will be exempt. For other homes, the equity must be lower than the exemption. People who have equity above the exemption level may have to sell the home and use the money to pay their debts, or they might have to pay the home’s value to the bankruptcy trustee.
Keeping the home may not be the best outcome for all individuals. If they will be unable to keep up the mortgage payments after the bankruptcy, the home may face foreclosure. Letting the house and mortgage payments go during bankruptcy may provide a fresh start.
People who are struggling to make payments or their home on with any other type of debt might want to discuss their options for debt relief with a lawyer. The lawyer may be able to review their options and whether they are a candidate for bankruptcy as well as what type of bankruptcy that might be. The lawyer also may be able to assist with the complex process of filing for bankruptcy and to ensure that documents are prepared correctly.