Just because you may need to file for Chapter 7 bankruptcy does not necessarily mean you need to face foreclosure on your home. You can use a chapter 7 bankruptcy to save your house if you are current on your mortgage payments when you file, or if your equity in your home is adequately protected by exemption laws available in your state. If you are unable to get current on your mortgage payments, it may be a better idea to file a Chapter 13 bankruptcy which will allow you to spread out your missed payment over several years.
Staying Current on Your Mortgage Payments
Suppose you have mortgage payments that you are worried about falling behind on. Maybe you’re in a higher interest rate period, you’ve reached the principle cap on an interest-only loan, or you have lost some hours at your job. In cases like these, a Chapter 7 bankruptcy could be a big help. Except for a few specific debt categories, such as student loans, back taxes, or child support and alimony, you can eliminate unsecured debt in a very short matter of time. Debts like credit cards, personal loans, and medical debts can be erased, allowing you to catch up on your mortgage payments.
Potential Risk of Filing Chapter 7 Bankruptcy
Once you have filed, you may not be able to back out of your bankruptcy case. If it is found that your house has too much equity, you likely will not be able to back out and dismiss your case. The ability to dismiss a case is based on the interests of your creditors. If your creditors would receive a distribution based on the sale of your house, the sale of the house will likely go forward. If your home is sold, you will receive the amount that you are entitled to exempt (under the homestead exemption, which can vary based on your the state you live in). Figuring out the exact amount of your homestead exemption is an important step in filing a Chapter 7 bankruptcy, and speaking with a bankruptcy lawyer at Groce & DeArmon, P.C. can help you to learn exactly what you risk when filing.
Related Post: What is Bankruptcy Protection?
Contact Groce & DeArmon, P.C. for a Free Consultation
At Groce & DeArmon, P.C. our team of bankruptcy attorneys is ready and willing to help you decide if bankruptcy is the right move for you. We have an experienced team that will work with you to wipe the slate clean and get a fresh start on life. Contact us today at 417-862-3706 or 1-800-640-3706.