Bankruptcy can be a great option for those who are struggling to repay large amounts of debt and are dealing with a constant barrage of creditors’ calls. But while bankruptcy may give people a clean slate, so to speak, it can also put them at risk of losing their property, including a home.
If you have filed for bankruptcy or are thinking about filing for bankruptcy, it’s important that you understand what will happen to your house. For answers about keeping your home and bankruptcy that are specific to you, reach out to Massachusetts bankruptcy lawyer David McLoon directly today.
Bankruptcy and the Automatic Stay
In the event that you are at risk of losing your home via a foreclosure, the first thing that you should know is that when you file for bankruptcy, the automatic stay will go into effect. Per 11 U.S. Code Section 362, the automatic stay temporarily prevents creditors, lenders, and collection agencies from pursuing any debts owed. This means that a foreclosure proceeding will be temporarily halted.
Chapter 7 vs. Chapter 13 Bankruptcy and Your Home
While the automatic stay will buy you some time in order to explore different options for keeping your home, the automatic stay in itself won’t ultimately save your home. Instead, whether or not you get to keep your home when you file for bankruptcy depends, in large part, on the type of bankruptcy you file.
In a Chapter 7 bankruptcy, you may be allowed to keep your home if you are current on your mortgage payments, your home equity can be protected with a bankruptcy exemption, and you have the means to continue making payments in the future. If these criteria cannot be satisfied, though, you’ll likely have to sell your home and use any proceeds to pay off creditors.
In a Chapter 13 bankruptcy, on the other hand, you’ll likely be allowed to keep your home, even if you’re currently behind on payments. Instead of having to give up your home, you’ll be asked to pay for the nonexempt equity that you have in your home via a repayment plan. You’ll only be asked to give up your home if you don’t have the income required to do this. As long as you keep making payments on time, you won’t lose your property (this applies to your home and other property as well, such as a car).
Bankruptcy Lawyer David McLoon Can Help
The idea of losing your home while also struggling with debt can be overwhelming. If you are thinking about filing for bankruptcy, it may be possible to still keep your home and relieve yourself of some of the financial burdens you are experiencing. To learn more about bankruptcy in Massachusetts and what happens to your house when you file for bankruptcy, reach out to Attorney David McLoon by phone or online today for a consultation.