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How bankruptcy could help save your home
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How bankruptcy could help save your home

On Behalf of | Nov 10, 2023 | Bankruptcy & Asset Protection

Bankruptcy might be something you are trying to avoid, even if you are struggling with debt that you cannot afford to pay back. One of the biggest reasons people do not consider bankruptcy is because they are afraid of losing their home but in some cases, bankruptcy could help you save your home.

Your home might be your biggest financial asset. Additionally, a home typically holds many memories and provides you with a feeling of stability. No matter how out of control your financial situation seems, knowing you still have your home can provide you with much needed comfort.

There are two types of bankruptcies typically filed by consumers: Chapter 7 and Chapter 13. You can potentially keep your home no matter which type of bankruptcy you file, but it depends on your situation.

Chapter 7 bankruptcy

It is easier to keep your home if you are already caught up on mortgage payments and have not gone into foreclosure. A Chapter 7 bankruptcy discharges all your qualifying debts, and if you can continue to make your monthly mortgage payments after your debts are discharged, you could keep your home.

If you are still going to have trouble making your monthly mortgage payments after all your other debts are discharged, you might need to look at other options, such as selling your home. Bankruptcy is not designed to eliminate your mortgage while still allowing you to live in your home.

Chapter 13 bankruptcy

Rather than discharging your qualifying debt, a Chapter 13 bankruptcy consolidates your debt and allows you to pay it off through a payment plan. The plan usually lasts between three and give years.

You must have a steady income to be eligible for a Chapter 13 bankruptcy, to show you can make your monthly payments. However, if you do, a Chapter 13 bankruptcy allows you to keep your home even if you are behind on your mortgage payments.

Overall, knowing the right choice for you depends on the type of bankruptcy you want to file and the status of your mortgage payments. But fear of losing your home should not prevent you from filing for bankruptcy if it will provide you with the relief you need.