You may have created fond memories or otherwise assigned great sentimental value to your current home. This is why it may be worrisome when you begin to fall behind on your monthly payments. If the last time you want is for your lender to seize your home and force its sale, then you may consider declaring bankruptcy. Follow along to find out what happens to your mortgage upon a bankruptcy filing and how a proficient Louisville, Kentucky Chapter 7 bankruptcy lawyer at Schwartz Bankruptcy Law Center can work to ensure your protection.
What happens to my mortgage if I file for bankruptcy?
First of all, you must understand that your mortgage is considered a secured debt. Meaning, your home is used as collateral and your lender will hold a lien on it. So, if you fail to fulfill your financial obligation of paying back your mortgage lender, then they have the authority to pay themselves back by seizing your home and forcing its sale.
This is all to say that you should strongly consider filing for bankruptcy if you anticipate any struggle with meeting your monthly mortgage payments. For one, this may place an automatic stay on your home, in which your mortgage lender may be barred from any further harassing collection activities; along with barring its foreclosure.
Secondly, this may allow you to declare a homestead exemption. In the state of Kentucky, you may exempt equity in your primary residence in the amount of up to $5,000. This may even be used to protect any real or personal property that you may use as a permanent residence, along with a burial plot for yourself or your defendant. This is especially helpful if your home’s equity is not enough to be used to pay off your outstanding debts in the first place.
What might happen to my automobile in bankruptcy?
Alongside a homestead exemption, the state of Kentucky has a personal property exemption that may be used to protect your automobile from being seized and liquidated. More specifically, you may claim up to $2,500 of equity in one automobile with accessories. Without further ado, other exemptions that you may claim include, but are not limited to, the following:
- Up to $1,000 worth of any real or personal property.
- Up to $3,000 worth of household furnishings and clothing.
- Up to $3,000 worth of tools, equipment, and livestock used in farming.
- Up to $7,500 from a personal injury award you or your dependent got from an injury.
- Benefits from public assistance, unemployment compensation, or workers’ compensation.
- Pensions from EISA-qualified retirement accounts, or from being a police or firefighter, state and county employee, or teacher.
With the complex court proceedings ahead, you should not go through it alone. Rather, you should have a talented Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center stand by your side throughout. Contact our firm today.