Last year around 522,808 cases of personal bankruptcy were filed in the United States. All types of families and adults find themselves having to file for bankruptcy for various financial reasons. The state of the filer’s financial situation regarding his or her home will be a factor in whether he or she will be able to keep it or might be forced to go through foreclosure during a bankruptcy. Understanding some of the basic facts for dealing with a house during the bankruptcy process may help the filer make some important decisions.
Will the Filer Automatically Lose His or Her Home When Filing?
Though losing the family home is a fear when filing for bankruptcy it is not an automatic outcome, depending on which chapter of bankruptcy is chosen when filing. There are a few other major factors that come into consideration as well when protecting the family home during bankruptcy. Some of these factors include:
· If the filer is current with all mortgage payments.
· Whether the filer will continue to make his or her payments after the bankruptcy concludes.
· Knowing the proper value of the home in case it does have to become an asset.
· The amount of equity that can be sold to pay off debts instead of the home.
The answer to some of these questions will help to determine whether the filer should file a Chapter 7 or a Chapter 13. If the filer thinks that his or her house has not been valued correctly, he or she may look into a property tax appeal to get the value reassessed, though the deadlines for this may be different with every county.
What are the Differences Between the Two Chapters?
As mentioned earlier when considering which chapter to file it is important to know they focus on different types of assets and can take different lengths of time to be completed. Chapter 7 bankruptcies focus on getting rid of medical bills, credit card debt, and personal loans which are all considered unsecured debt. Chapter 13 bankruptcies allow the filer to catch up on secured debt payments, such as house or car payments. Chapter 7 is taken care of in a much shorter time span than Chapter 13. So, depending on the status of the majority of the debts in question, one can determine which chapter to choose. If the filer does not want to lose his or her house during this process, then the status of those payments should be the first consideration.
When Should the Positional Filer Decide to File?
Bankruptcies are filed to help take care of different types of debt that can affect the filer’s overall life. A large medical debt due to an accident is just one example of a debt that appears as if it should not affect the owner’s status. However, the house will be taken into consideration during a bankruptcy so the filer should understand how the two chapters may affect ownership of the home. If the potential filer is still uncertain about how the final status of his or her bankruptcy will affect the home then he or she may not want to file alone. If not versed in the proper real estate law then any filer could make a mistake during the process of his or her bankruptcy.