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Which Bankruptcy Option Will Allow Me to Keep My Home?

Making the decision to declare bankruptcy is a challenging process—especially when it can jeopardize the ownership of your property. If you are thinking about declaring bankruptcy but worry about what might happen to your home, there are various ways to help you keep your house.

There are two different types of bankruptcies you can file for: Chapter 7 and Chapter 13. Chapter 7 allows you to ask the bankruptcy court to discharge most of the debt you owe. Chapter 13 bankruptcy is available to individuals with debts under the maximum value who are able to repay over time. It consolidates all debts into a single amount and allows debtors to pay installments over three or five years, earning it the nickname "the wage-earner's bankruptcy." While Chapter 7 discharges qualifying debt altogether, Chapter 13 allows individuals a longer period of time to make payments toward a consolidated debt in smaller amounts.

Keeping Your Home in a Chapter 7 Bankruptcy

Since Chapter 7 discharges most of your debt in a shorter amount of time, it is a much stricter and less flexible process. Although filing for Chapter 7 bankruptcy can be less flexible when it comes to saving your home, there are still options available to you. While bankruptcy courts will normally allow you to keep enough of your assets to afford shelter, your mortgage is still a secured debt, which means the bank has the ability to take back your home as collateral for the remaining balance on your mortgage.

You may be able to keep your house if you meet the following conditions:

  • You have the ability to make your house payments
  • You protect your home equity with a bankruptcy exemption
  • You have little or negative equity in your house

Keeping Your Home in a Chapter 13 Bankruptcy

If you are behind on your mortgage payments, Chapter 13 might give you the time to catch up while staying in your house. The court gives you a three- to five-year payment plan to repay past-due mortgage accounts along with current payments. This plan can be expensive, and you will have to demonstrate that you have enough income to pay all amounts required in your plan. But if you have the ability to make the payments, it gives you flexibility to repay your debt while keeping your house.

Contact a Fort Worth Bankruptcy Attorney: (817) 576-1889

Filing for bankruptcy can be confusing, especially when you want to keep your most important assets. An experienced Fort Worth bankruptcy attorney can explain the different options for your case so you can keep your home. Huebner Law Firm has helped hundreds of families recover from their difficult financial situations. Contact us today!

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