Facing financial challenges can be overwhelming. For some, filing for bankruptcy represents a possible solution. A primary concern many have when considering bankruptcy is whether they can keep their home.
The answer to this question depends on various factors. Understanding the intricacies of bankruptcy laws is necessary for making informed decisions about your home and financial future.
Chapter 7 bankruptcy and your home
Chapter 7 bankruptcy is a liquidation bankruptcy. It is also the most common form of personal bankruptcy, with the Motley Fool reporting that 70% of those who file for bankruptcy file for Chapter 7. This format may require the sale of assets to pay off debts. However, individuals filing for Chapter 7 bankruptcy may still be able to keep their homes if they qualify for the homestead exemption and their equity falls within the protected limits. It is important to note that the specifics of how Chapter 7 bankruptcy affects your home can vary.
Chapter 13 bankruptcy and your home
Chapter 13 bankruptcy, on the other hand, involves creating a repayment plan to settle debts over a specified period. The period typically lasts somewhere between three to five years. This form of bankruptcy can be a viable option for those looking to retain their homes. Through the repayment plan, individuals can catch up on missed mortgage payments and address outstanding debts while keeping their homes.
Understanding the laws governing bankruptcy and homeownership helps you make informed decisions about your financial future. Exploring available options can help you navigate this challenging process and work towards a more stable financial situation.