Do You Lose Your House in Bankruptcy?

Table Of Content

• Show You Have Sufficient Income
• Bankruptcy Forms
• Learn how to file for bankruptcy and keep your house in Chapter 7 or Chapter 13 bankruptcy.
• Losing Nonexempt Property in Chapter 7 Bankruptcy
• Chapter 7 Bankruptcy: What Can You Keep?
• Los Angeles County Bankruptcy Court
• Hon. Theodor C. Albert, Chief Judge • Kathleen J. Campbell, Clerk of Court

The stay was designed to temporarily halt foreclosure and stop repossession of homes regardless of what stage the foreclosure proceedings are in. For homeowners with too much equity to qualify for a homestead exemption in their jurisdiction, this is an advantage of a Chapter 13 filing. Since your house must be considered exempt from the bankruptcy for you to have the most favorable scenario for keeping it, knowing how exemptions are determined is critical. State or federal homestead exemptions determine how your home is handled in a bankruptcy.

Show You Have Sufficient Income

It doesn’t mean, however, you automatically keep your house. Keep in mind as we drill down on the details that bankruptcy is a second chance for people who have more debt than they can pay. Bankruptcy laws were created with the understanding that there’s no upside to putting someone out on the street, and the bankruptcy courts work to make sure that doesn’t happen. The Chapter 7 trustee isn't interested in the home because of the lack of equity available to pay creditors and doesn't object to the motion. You can't bring the home current because if you could, you would have done so before filing. But being able to protect or pay for your home equity isn't enough to keep your house in bankruptcy.

Bankruptcy Forms

The journey to homeownership is often filled with dedication and perseverance — which is why deciding to part ways with your home can be difficult when considering a financial restart. Research and understand your options with our articles and guides. Bankruptcy is a huge financial step, but it’s one that, in most cases, allows you to keep your home.

Learn how to file for bankruptcy and keep your house in Chapter 7 or Chapter 13 bankruptcy.

These companies may impact how and where the services appear on the page, but do not affect our editorial decisions, recommendations, or advice. The bottom line is that if you want to stay in your house, you still have to pay your mortgage. While you wait, the clerk will process your case by scanning your forms and uploading them to the court’s online filing system. Once you have prepared your bankruptcy forms, you will need to print them out for the court. You will also need to sign the forms once they are printed.

Suppose your bankruptcy lawyer calculates the monthly amount you'd be required to pay in a Chapter 13 plan. The $500 monthly payment includes $200 for mortgage arrearages, $150 for spousal support arrearages, and $150 for nonexempt home equity. However, after deducting reasonable living expenses from your monthly income, you're left with only $250 monthly.

Keeping your home in a Chapter 7 bankruptcy will depend on how much you owe on it and what exemptions apply. If you have a lot of equity in your home, the trustee may choose to liquidate it and use the money to pay off your creditors. You must be able to protect all of your home equity with a bankruptcy exemption. Your creditors are entitled to the home equity you can't protect.

Los Angeles County Bankruptcy Court

Lola wanted to file for Chapter 7 bankruptcy to stop a home foreclosure and erase credit card debt. Lola's bankruptcy lawyer explained what she would need to do to be sure she could keep her home in Chapter 7 bankruptcy. Lola was able to protect all of her equity with a bankruptcy exemption. The bankruptcy lawyer advised her to wait to file for Chapter 7 until she could bring the mortgage current if she wanted to keep the house. However, Lola knew she couldn't raise the money soon and would continue to fall further behind. A month after filing for Chapter 7, the bankruptcy court granted the lender's motion to lift the stay because of the mortgage arrears.

If you have federal student loans and you meet certain eligibility criteria, you may qualify to have your student loan debt erased in your Chapter 7 case. Getting private student loans discharged is also possible, but it often requires legal help because the process is legally complex. In this case, your trustee could sell the vehicle for $9,000.

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When Does a Small Business File for Bankruptcy? And 8 More Questions - The New York Times

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Posted: Thu, 18 Jun 2020 07:00:00 GMT [source]

You’ll learn how to prepare a budget and avoid incurring debt with high interest rates. There are more than 20 required forms, and since some forms are several pages long, your total bankruptcy petition may be up to 70 pages. You'll need a lot of this information to fill out your bankruptcy forms completely and accurately. The web pages currently in English on the FTB website are the official and accurate source for tax information and services we provide.

So, if you own your home free and clear, filing a Chapter 7 bankruptcy may not be the best path for lasting debt relief. If there is enough nonexempt equity, the trustee will likely sell the home, give you the dollar amount of the homestead exemption, and pay off creditors with the remaining funds. When you file for bankruptcy, the automatic stay stops creditors from pursuing collection activities, including foreclosures. However, it might not protect you throughout the entire procedure.

The bank will either file request with the bankruptcy court asking permission to take the car or wait until your discharge is granted before picking it up. Once you enter the doors of your local courthouse, you will be greeted by security guards, who will ask you to pass through a metal detector. Once you pass security, you will go to the clerk’s office and tell the clerk that you’re there to file for bankruptcy. They will take your bankruptcy forms and your filing fee (or application for a waiver or to pay the fee in installments). Filing any type of bankruptcy provides immediate debt relief through the automatic stay.

You can keep your home if you're current on your house payment and meet other qualifications discussed below. Homeowners find it easier to make monthly mortgage payments after erasing credit card balances, medical bills, and other debts in the Chapter 7 case. For instance, if you can't protect all home equity with a bankruptcy exemption, the Chapter 7 bankruptcy trustee appointed to your case will sell it for the benefit of creditors. Also, your lender can recover your house if your mortgage isn't current during and after your Chapter 7 case. In Chapter 13, the court will grant the lender's motion to lift the stay if the Chapter 13 plan doesn't comply with the two primary rules discussed in this article.

To give the trustee time to evaluate your property, all of your assets become part of a bankruptcy estate when you file for bankruptcy. You lose ownership temporarily and the trustee manages your property in your place. Because Chapter 13 bankruptcy involves a repayment plan you can use it to catch up missed payments. Depending on where you live, you may have a few options to save your home from foreclosure. You'll continue making your regular monthly mortgage payments - typically directly to the mortgage company - while your Chapter 13 reorganization is pending. Copyright ©2024 MH Sub I, LLC dba Nolo ® Self-help services may not be permitted in all states.

If you file for Chapter 7 bankruptcy, the trustee and your lender will each determine whether they can take your home. Below, we explain what to do to keep your house safe in Chapter 7. When a lender forecloses on a home, it can request a deficiency judgment.

One of the main reasons to consider filing chapter 13 bankruptcy is that it automatically stops foreclosure proceedings and it can help you find an affordable way to stay in your home. There are two main levers that will decide if you can hold onto your home if you’re filing Chapter 7 with a mortgage or liens against your home. The second is your home equity, which again is what you get when you subtract your home’s value from your mortgage/liens. Once you know which exemption set to use, determine how much equity you can protect using the homestead or wildcard exemption. You might also be able to eliminate or "strip" a lien from a junior mortgage or home equity line of credit (HELOC).

If you find a lender who will consider you prior to 2 years, make sure you are fully aware of all the terms and conditions included in your mortgage. Scrutinize the details and look at all the costs to ensure you’re not being scammed. If you’re thinking about filing bankruptcy, it’s important to understand your options. Chapter 7 bankruptcy and Chapter 13 bankruptcy are the bankruptcies that people most frequently seek out.