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Do you automatically lose your home if you file for bankruptcy?

On Behalf of | Oct 27, 2020 | Bankruptcy | 0 comments

Many people across New York are struggling to stay on top of their finances, and if you are among them, you may be considering bankruptcy. A personal bankruptcy filing, such as a Chapter 7 or 13 bankruptcy, may help you get a fresh start and a better grip on your finances. You may have concerns, though, about whether you may have to surrender your house if you decide to move forward. 

Per Homeguides.SFGate.com, losing your home when filing for bankruptcy is not definite. Whether you lose yours depends on several variables, among them whether you move forward with a Chapter 7 or 13 bankruptcy. 

Chapter 7 bankruptcy

A Chapter 7 filing is more or less a liquidation bankruptcy, meaning you may have to turn over some of your assets to settle some of your debts. Whether your house is among the assets you must turn over depends on how much non-exempt equity you have in it. With a Chapter 7 filing, you must sell any non-exempt assets to pay back what you owe. Whether you are current on your mortgage payments may also come into play. 

Chapter 13 bankruptcy

You may have a better shot at keeping your home with a Chapter 13 bankruptcy. With this type of filing, you create a plan that allows you to pay back a portion or percentage of your outstanding debts. If you stick to the plan and also keep up with all your mortgage payments, you may be able to hang on to your home. On the flip side, if you fail to keep up with your bankruptcy case or mortgage terms, you may have to surrender it after all.