When people in Eugene, and throughout Oregon, are struggling with financial challenges, they often consider filing for bankruptcy. For many, however, the possibility of losing their home is a strong deterrent to seeking the assistance and protection they need. Depending on people’s situation and the type of bankruptcy protection they seek, they may not have to give up their homes.
Through Chapter 7 bankruptcies, people must liquidate certain assets in order to repay their debts. However, this does not always include their homes. State and federal law allow for certain exemptions, including one for homesteads. In the state of Oregon, this exemption amount is $40,000 equity for an individual homeowner, or $50,000 for a couple filing jointly. This means that people whose home equities are equal to or less than the exemption amounts may be able to keep their homes. According to the United States Bankruptcy Court for the District of Oregon, however, if people have more equity in their homes than the exemption amounts, they may be forced to sell their homes under a Chapter 7 bankruptcy filing. The exemption amount would then be returned to them and the remainder of the sale’s proceeds would be applied towards their debts.
Unlike a Chapter 7 filing, those who file for Chapter 13 bankruptcy do not have to liquidate their assets. As such, they are able to keep homes they own and are not subject to exemptions. According to the U.S. Courts, filing for Chapter 13 will stop foreclosure proceedings. If people are able to keep up with their mortgage payments over the course their repayment plans, then they may be able to keep a home that they were on the verge of losing.
Struggling with debt can be difficult enough for people in Oregon, and their families. The thought of being put out of their homes can make an already stressful situation more challenging. Working with an attorney may help those considering bankruptcy to understand their options for achieving a fresh financial start, and to protect their assets.
