Worried about losing your home? It may not happen in Chapter 7
Most people make an effort to manage their debt by making regular, on-time payments. But as you know, the sudden loss of a job or an unexpected injury or serious illness can wreak havoc on these carefully laid plans. What was once a manageable situation may quickly grow out of control, leaving you worried about your financial future and your family home.
In many cases, bankruptcy can be your best solution to debt problems. But, a lot of people are scared of bankruptcy because they’ve heard they could lose their home and other assets. In reality, this rarely happens. And in some cases, you may be able to keep your home.
Filing bankruptcy and keeping your home
Chapter 7 is sometimes referred to as “liquidation bankruptcy.” Chapter 7 discharges debts and, in exchange, debtors can be required to sell some property to pay back their creditors. Because your home is typically your biggest asset, it’s easy to see why you’d be concerned about having to sell it to pay back creditors. But if you’ve kept up on your payments and depending on your home’s equity, you may be able to write your home off as an exemption.
Bankruptcy and the homestead exemption
Determining whether or not your home is exempt in bankruptcy, meaning it does not need to be sold to pay back creditors, depends on your home’s equity. Equity is the fair market price for your home less the balance of your mortgage or home equity loans, explains an article for FindLaw. If your home’s equity falls below Georgia’s exemption limit and you are up to date on your payments, you may be able to keep your home.
Even though Chapter 7 may not be the best option for you if you’re facing foreclosure, there are other ways to resolve this problem, which you can talk to an attorney about.
Contact a lawyer and know your options
It’s important not to let the fear of losing your home to bankruptcy stop you from getting relief from your debt. In many cases, filing bankruptcy is the best option. For some, it isn’t. In order to know if Chapter 7 is the right option for you, talk to a bankruptcy lawyer who can explain your options and help you choose the one that’s best for you. An attorney can also explain the homestead exemption process and whether you are eligible, which will put you in the strongest possible position after bankruptcy.