Can You Keep Your Home If You File Bankruptcy?

What do you want of Home Loans After Bankruptcy ?.

The reality is that in most situations, the court does not "take away" the debtor's home and you do not risk losing your home unless you are not able to afford post-filing mortgage payments. In many situations, filing bankruptcy can undoubtedly help you save your home. If you are behind on your mortgage payments, filing part 13 bankruptcy case gives you a principal opportunity to catch up and repay the past-due amount at 0% interest over a period of three to five years. If you are behind on asset taxes, those can also be repaid through part 13 plan.

Home Loans After Bankruptcy

If you have no equity in your home and it's underwater as so many other homes these days, it's not treated as an asset of any current value. In other words, if you file part 7, the bankruptcy trustee does not pursue sale of this property. In part 13, having this asset does not increase your plan payment. If you have some equity in your home, there is a good opportunity that a big part of it may be exempt and would not trigger liquidation or increase in cost to the trustee. The court allows debtors unavoidable exemptions when the case is filed, meaning that assets worth up to a unavoidable threshold do not have trigger liquidation (in Ch 7) or cost increase (in Ch 13). For your customary residence, the exemption is particularly generous and could be as high as 0,000 depending on your situation.

If you have any non-exempt equity in your home, your home is at risk in a part 7. But don't panic just yet! If this is your situation and you want to withhold the home, you can do so if you file part 13. In part 13, any non-exempt amount is repaid to creditors over a period of three to five years. As an example, let's say your customary house is worth 600k. Your mortgage loans total 475k. You invite a homestead exemption of 100k. The non-exempt amount is 25k. This means that roughly 25k would have to be repaid to creditors through the part 13 case; if you have a 5-year plan, this would come out to roughly 7 per month. Your lawyer would be able to imagine the exact cost for you, taking into notice other factors, such as the trustee's menagerial costs which will be added to the payment.

If you are in a part 13, faultless all the plan payments and keep current on post-filing mortgage payments, you will not lose your home. What happens if you can't make the mortgage payments after filing? Try to negotiate with your lender; maybe a loan modification would be inherent for you. Loan modification, of your first mortgage loan on the customary house at least, is not done through bankruptcy and you have to work it out with the lender directly. If the loan modification does not go through and you are not able to work out any arrangement with the bank, the bank will ultimately go to the bankruptcy court and ask for a permission to commence foreclosure proceedings. At that point, it may still be inherent to work out an business agreement - typically, this involves giving the bank a part of the past-due post-filing amount immediately and repaying the rest over the next six months. If you are not able to do that, only then will the house be lost.

Bottom line is that the bankruptcy court and the bankruptcy trustee are sympathetic to the needs of homeowners and is it often inherent to withhold your home even when you file a bankruptcy case.