When your medical, credit card or other bills become so overwhelming that you can no longer keep up with them, you may need some assistance getting back on your feet financially. Often, people in your shoes look into whether filing for bankruptcy may help them get a better handle on their financial affairs, but many of them have questions about the process and what they could potentially lose, should they file.
More specifically, one of the most common questions today’s prospective bankruptcy filers have is whether they will be able to keep their homes, should they decide to move forward with the process. While, unfortunately, there is no single, simple answer to this question, whether you will ultimately lose your home when you file for bankruptcy depends on the type of filing you pursue, among other considerations.
Can you keep your home when you file for Chapter 13?
Most personal bankruptcies are of either the Chapter 7 or Chapter 13 variety. Chapter 7 bankruptcies help lower-income people who cannot reasonably pay off their debts over time get a fresh start, while Chapter 13 bankruptcies involve restructuring bills in an effort to make them more manageable. When you file for a Chapter 13 bankruptcy, you should reasonably be able to hang on to your home, provided you make all future mortgage payments on time and in full.
Can you keep your home when you file for Chapter 7?
When you file for a Chapter 7 bankruptcy, the answer to whether you will keep your home becomes a bit more complicated. Ultimately, whether you keep your home when you file for Chapter 7 depends on the value of the home and whether the equity you have in it falls above or below Minnesota’s set exemption amount.
If you have, to date, hesitated to move forward with bankruptcy proceedings because you are fearful of losing your home, note that this is not necessarily going to be your fate. You may have other options at your disposal that will allow you to get a better handle on your finances without displacing you from your home.