Bankruptcy is an effective solution to insurmountable debt for many people, but it is a common misconception that filing means you will lose everything you have to your name. On the contrary, filing for bankruptcy can help you retain some assets and get your debt under control. Understandably, you may be most concerned with whether or not you can keep your home when you file for bankruptcy.
Various factors determine the answer to this question. According to the Huffington Post, there are a number of benefits that bankruptcy may provide, and keeping your home may be one of them. Read on to learn whether or not you will be able to keep your home if you file.
Which chapter you file
The first factor to consider that will influence that status of your home ownership is what chapter of bankruptcy you plan to file. You will likely choose either Chapter 7 or Chapter 13, and these each have different consequences. The latter may allow you to stop foreclosure proceedings and commit to a repayment plan. The former may allow you to keep your home, too, so long as your mortgage is current.
If creditors claim equity
The aforementioned stipulation of Chapter 7 — that you be current on mortgage payments in order to keep your home—makes some people question whether it is the right option. Typically, however, you will not be at risk of losing your home under Chapter 7 unless it contains significant amounts of equity that a creditor claims for debt repayment.
How far behind you are
Bankruptcy can help you sort out many debts and regain financial stability, but this is only true if you address your problems soon enough. Waiting until you are months behind on your mortgage may put you in a situation where it is much more difficult for bankruptcy to help you save your home. It is important to seek out a solution sooner rather than later.