The Law Office of Kim Covington Kim Covington Bankruptcy Lawyer Kim Covington Bankruptcy Lawyer

Will I lose the equity in my home if I file Chapter 7 bankruptcy?

Many people consider purchasing an Oregon home to be an investment. Even when overwhelming debt is straining your finances to the breaking point, you may be hesitating to seek relief because of your house. If you have equity in your home, you may worry that declaring bankruptcy could strip you of all the money you have put into it. The Oregon State Bar explains that the answer to your dilemma is not cut and dried.

When you file Chapter 7 bankruptcy, your assets are liquidated to pay your debts. Equity in your home definitely counts as an asset, but it may be that your home is exempted from liquidation. Both state and federal bankruptcy laws have placed limits on the amount of equity you may be allowed to keep. Laws change, so the exact amount varies.

If you have lived in Oregon less than two years, you may claim the state exemptions. This limit is slightly higher if you and your spouse are filing for Chapter 7 bankruptcy jointly. The federal exemption may be different, and you may use it instead if you have resided in the state for two or more years.

There are issues other than the exemption limit that may affect whether you can keep the equity, though. For example, if you have a mortgage on your home, the lender has the right to foreclose on the property if you do not continue to make the payments. So, you will have to determine whether you can afford to keep the house before making the final decision. This is not an exhaustive list of the factors that may affect your exemption. Therefore, this information should not be interpreted as legal advice.

No Comments

Leave a comment
Comment Information

Office Locations

The Law Office of Kim Covington

Eugene Office
1445 Willamette Street, Suite 9
Eugene, OR 97401

Map & Directions

Albany Office
1135 Dale Street SE, Suite #B
Albany, OR 97321

Map & Directions

Roseburg Office
1701 West Harvard, Suite 201
Roseburg, OR 97470

Map & Directions

Phone: 541-393-2790
Toll Free: 800-673-1891
Fax: 541-344-6466