Can you keep your house if you file for bankruptcy?

[anonymous]

can you keep your home if you file for bankruptcy

[Bankruptcy Helper]

Not all individuals who file for bankruptcy will lose their home. Talk to a bankruptcy attorney about your financial situation prior to filing bankruptcy.
How can I keep my house in a bankruptcy?

Each state has created bankruptcy laws which outline a homestead exemption. What is a homestead exemption? It is the amount of equity that is protected in your home from the bankruptcy court and other creditors.

How do you calculate the equity you have in your home? A bankruptcy lawyer can help, but basically, you subtract the amount of the home loan or mortgage (plus other liens on the home) from the FMV or fair market value.

State exemption laws vary so it is important to understand if the applicable state exemptions will protect your home. If for instance, the homestead exemption in your state exempts all of the equity, you can generally keep your home. Filers must, however, keep making their house payments and must also be current on other real estate taxes and the utilities.

State laws are VERY different. In Ohio, for instance, only $5,000 in equity is protected. Other states such as Texas and Oklahoma have much more generous exemptions. For instance, in Oklahoma, there is no limit to the value of your homestead which can be exempt (assuming you have been in the state for more than 2 years).

Why must you live in the state for at least 2 years? This rule was created in 2005 when bankruptcy laws were overhauled and prevents claimants from states with less favorable bankruptcy exemptions from moving to a state with more favorable exemptions just to file bankruptcy. If the filer purchased the home within 1,215 days prior to filing bankruptcy, the amount of the exemption is capped at $136,875.

Other conditions may limit a filer’s ability to use the full homestead exemption in Texas and in Oklahoma including felony convictions, or fraud. Talk to a bankruptcy lawyer if you have questions.

Filing Chapter 13 Bankruptcy and keeping your house

Filers who want to keep their home but who have too much equity may file a Chapter 13 Bankruptcy. Chapter 13 Bankruptcy, unlike a Chapter 7 Bankruptcy, is not a liquidation bankruptcy and filers may keep their home and continue to make payments, even if the bankruptcy exemption does not protect all of the equity they have in their home.

Can everyone qualify for Chapter 13 Bankruptcy? No, to file Chapter 13 Bankruptcy most filers will need an income which will allow them to create a 3 to 5 year debt repayment plan. This repayment plan must then be presented and approved by the court.

What should you consider before filing for bankruptcy?

Is filing bankruptcy and keeping your home as easy as it sounds? No, unfortunately there are many hurdles for bankruptcy filers including:

• The bankruptcy court may require filers to pay all of their missed mortgage payments in a time frame which may be difficult for many filers to do.
• Filing bankruptcy will not remove a lien from the home.
• It is estimated that 80% of bankruptcy filers eventually lose their home, even after filing bankruptcy.
• Filing bankruptcy may eliminate your ability to negotiate a loan modification or short sale with your creditor.