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2016-01-26 10:50:48
Will I Lose My House If I File Bankruptcy?

Filing bankruptcy is often considered a “last resort” when you are in a bad financial situation, and you feel like there is no escape. It should certainly not be something that is taken lightly. However, it is important to understand the details of such a decision before you make it. One question that many potential bankruptcy filers have is “Will I lose my home if I file bankruptcy?” Figuring out the answer to this important question can help you determine if bankruptcy is the right choice for your situation.

Two Types of Personal Bankruptcy

First, it’s important to realize that there are two different types of personal bankruptcy filings. Bankruptcy files are called chapters and the two designated for personal bankruptcy are Chapters 7 and 13.

Chapter 7 bankruptcy is a liquidation form of bankruptcy. When you file this form, all “non-exempt” assets are sold to pay off any of your loans and you are left with essentially no debts. However, depending on your exact situation, if you have equity in your home, you may be able to exempt your home from your bankruptcy and keep it. However, you will need to catch up on payments and stay current through the bankruptcy process.

Chapter 13 bankruptcy is a debt restructuring process. You are working out a payment plan with lenders so that you can pay back your loans over a three to five-year period. In most cases you will be able to keep your home with this type of bankruptcy—assuming you want to do so.

Second Mortgages

A second mortgage may sometimes come into play with the determination on whether or not you keep your home. You will need to talk to your bankruptcy lawyer about how this particular lien is figured into the equation. In most cases, a second mortgage is considered an unsecured debt, so it will likely not prevent you from keeping your home—assuming you want to do so.

Whether you decide to let your home go, or you keep it, buying a home in the future after you have been through bankruptcy is sometimes difficult. That’s why it is vital that you work with a knowledgeable and experienced real estate agent. Contact us at Cowdin Group and let us help you through this process. We have assisted many people as they sought to purchase a home after bankruptcy—or if they had other obstacles standing in their way of buying a dream home. We look forward to helping you, too!

 
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