Homeowners considering a Chapter 7 bankruptcy probably have understandable concerns about whether or not they can keep their home through to the side of the procedure. In many cases, homeowners do not need to forfeit their homes in order to create a fresh financial start, but it is never wise to assume this is the case. If you hope to use Chapter 7, be sure that you pay special attention to the details of the procedure to ensure that you do not run into additional difficulties keeping your home while you discharge your debt.
Homeowners generally enjoy some degree of exemption in bankruptcy, as the government generally prefers for those who file to submit to restrictions but not shoulder financial ruin or enter homelessness. However, those who file for Chapter 13 have more flexibility and higher exemption thresholds than those who choose to file under Chapter 7.
Still, those who choose to file under Chapter 7 may often keep their homes, depending on the amount of equity they have in the property. When a trustee assesses the value of a home to determine whether a homeowner must forfeit the property, he or she only considers the equity that the owner has within the property, not the overall value of the home. While building up equity is often a positive thing for a homeowner, having low or negative equity may work in favor of those who file Chapter 7.
As you consider your own bankruptcy, pay careful attention to the specific requirements of each Chapter, as well as the state-specific laws that may impact the process. If you do not carefully navigate the procedure, you may find it creates more complications for your financial woes than it offers solutions. An experienced attorney can offer you the guidance and insight you need to undergo the bankruptcy you need and protect your rights in the process.