Your home may hold a lot of meaning to you and your family. The last thing you may want is to lose your home and uproot your and your family’s lives simply because you cannot keep up with your monthly mortgage payments. Unfortunately, though, with every missed payment, you may be looking at declaring bankruptcy as a more and more realistic result. Well, for this, please continue reading to learn more about the possibility of losing your home when filing for bankruptcy and how an experienced Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can work to protect you from this outcome at all costs.
Will I possibly lose my home if I file for bankruptcy?
Notably, Chapter 13 consumer bankruptcy is designed to help debtors keep their valuable assets, such as their homes. Although not everyone qualifies to petition for this bankruptcy option. This is because you must prove to your bankruptcy trustee and the court that you have a steady income resource and overall the financial means to keep up with an ordered three- to five-year debt repayment schedule.
So, if you are more realistically looking at the Chapter 7 consumer bankruptcy option, your home may be threatened. That is, your bankruptcy trustee may exercise their right to sell your home and use these liquidated funds to pay back your outstanding creditors. However, you may be able to protect your home from this fate, under certain circumstances.
For one, you may protect your home equity through the federal or state homestead exemption, possibly in combination with a wildcard exemption. The homestead and wildcard exemptions under federal and state law are $27,900 plus $1,475, and then $46,350 plus $1,000, respectively. Of note, your trustee may still choose to sell your home if your combined exemptions only protect a portion of your home equity.
It is worth mentioning, though, that Chapter 7 cannot and will not discharge your mortgage debt. So if you still do not believe you can feasibly keep up with your monthly mortgage payments post-bankruptcy, you may be better off allowing your trustee to sell your home. This is instead of risking a foreclosure on your home in the end.
What are other possible methods for protecting my home?
After speaking with one of our lawyers, you may learn that declaring bankruptcy is too drastic a move. Rather, this should be viewed as a last resort after trying alternative methods to protect your home. For example, our lawyer may work on your behalf to negotiate a loan modification with your mortgage lender. That way, an adjusted interest rate, lower monthly payments, and/or an extended mortgage length may make it more manageable to keep up with.
Or, we may ask your mortgage lender about their willingness to offer a loan forbearance, in which they may temporarily pause your mortgage payments. With this breathing room, you may have time to organize your assets and debts better, and even create a practical monthly budget, to make payments on time and pay off the rest of your missed payments once they resume.
And so, if you are ready to get started on your bankruptcy filing or otherwise, now is a better time than ever to contact a skilled Louisville, Kentucky consumer bankruptcy lawyer. Schwartz Bankruptcy Law Center is here to help.
