Can You Keep Your Home After Bankruptcy?
While the decision to file for bankruptcy should never be taken lightly, it is important to distinguish the difference between fact and fiction. For example, prospective filers are often told that they will lose home in the process. However, this is not always the case. Learn more about what happens to your home in a bankruptcy case, and discover what an experienced attorney may be able to do for you.
Understanding the Basics
Bankruptcy is a process in which a debtor comes to the court, asking to be released from their obligation to their creditors. It is, in many ways, a fresh start. Keep in mind, however, that it does not come without cost. Your credit does take a hit (though not quite as severely as people make it out to be). You may also lose some (or most) of your assets, but homesteads are protected. As such, they are treated quite differently in bankruptcy than other assets.
Chapter 7 Bankruptcy and Your Home
In Chapter 7 bankruptcy, debtors may be released from nearly all of their creditor obligations. (Please note that federal student loans, child support, and taxes may not be eligible for discharge.) Assets that have liens on them may be collected, but homesteads are protected up to a certain limit. In the state of Illinois, the limit is set at $15,000 for single filers and $30,000 for joint filers.
If the home’s equity does not exceed this amount, the debtor may be permitted to keep the home. Otherwise, it may be sold and some of the proceeds may go to help pay for the bad debts. Debtors at risk for a home loss through bankruptcy may still have options, however. For example, the debtor may be permitted to keep the home if they are current on the mortgage and promise to continue making their payments. If you are concerned about losing your home in a Chapter 7 bankruptcy, speak to an experienced attorney about your options.
Chapter 13 Bankruptcy and Your Home
Because Chapter 13 bankruptcy filers typically pay their debts over a predetermined time-period, they are typically permitted to keep most of their assets, so long as they continue to make timely payments. Of course, there may be situations in which it may make more sense to let the home go during bankruptcy. For example, if the home has a lot of repairs that must be made and little to no equity, the debtor may be better off in a different location. Be sure to consider your options carefully, and always discuss bankruptcy decisions with a qualified legal professional.
Contact Our McHenry County Bankruptcy Lawyer
At the Thomas Law Office, we recognize that filing for bankruptcy is not something anyone wants to do. However, we also know that sometimes life changes, circumstances happen, and even the best managers of money and credit can find themselves in financial trouble. Seek legal assistance that understands your struggles and is willing to help, not judge. Contact our McHenry County bankruptcy lawyer and schedule a personalized consultation. Call 847-426-7990 today.
Source:
http://www.illinoisbankruptcy.
https://www.washingtonpost.
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