Will I Lose My Home If I File for Chapter 7 Bankruptcy?
Foreclosure Defense Lawyer Tampa, FL
When you file for bankruptcy, it is important to understand that the process is meant to give you a free new start without the burden of debt. That means that the court is not looking to take away every single thing that you own; that would be counterproductive and cause the opposite side effect.
When you file for Chapter 7 bankruptcy, that indicated that you are a person who is looking to discharge certain debts by filing your case in a bankruptcy court. You’ll then turn all of your nonexempt property over to a trustee and follow the orders and rules set by the bankruptcy court. Some of your debts will be discharged, which releases you from your dischargeable debts and provides a court order that keeps creditors from attempting to collect from you.
Being able to exempt all of your home equity is the most important part of protecting your home. Whether or not you’ll lose your home when you file for Chapter 7 bankruptcy will depend on:
- If your mortgage is current
- If you’ll have the financial ability to continue making mortgage payments after bankruptcy
- How much equity you can protect with a homestead exemption
- The amount of equity in your home.
If you are not up to date with your mortgage payments, it may be difficult for you to keep your home. The automatic stay will stop your home from going through foreclosure, but it may only delay the inevitable. Your mortgage is a secured debt, which is one that does not get wiped out by Chapter 7 bankruptcy and therefore allows the lender to foreclose if you fail to pay. It also does not provide a way to catch up on overdue payments.
Contrary to what your initial understanding of bankruptcy may be, you do not lose everything. If you file for bankruptcy, everything that you once owned then becomes part of a bankruptcy estate. In some cases, people keep all of the property that they own when they file for bankruptcy. Items that can be retained include furniture, bedding, kitchen utensils/appliances, property or tools that you will need in order to work, a modest car, clothing, ERISA-qualified retirement accounts, a small amount of jewelry, and equity in your home. You cannot exempt luxury items are they are not what are necessary for you to live. When filing for bankruptcy, you should expect to surrender items such as luxury cars, boats, timeshares, vacation homes, any rental property, investment and savings accounts,
Your Chapter 7 bankruptcy trustee will then sell the remaining assets and distribute the sales proceeds to your creditors.
Contacting a bankruptcy attorney to help you with your case could prove crucial. It is not likely that a judge will allow you to dismiss your case, and a mistake could cost you valuable property.
Filing for bankruptcy is not an easy decision to come to, nor is it one that you take lightly. One thousand questions run through your mind as you consider your options and next steps. Experienced attorneys are ready to assist you with your case. Call today for a complimentary consultation with a foreclosure defense lawyer Tampa, FL trusts at The Law Office of Michael A. Ziegler, P.L. to better understand your options.