Will I lose my home if I file bankruptcy?

 Posted on July 22, 2020 in Home Ownership and Bankruptcy

If you are in the process of considering bankruptcy, it is likely that you have multiple financial concerns. Many people are aware that filing bankruptcy can lead to asset loss. Thus, one of the most common concerns bankruptcy filers have is if they will be able to keep their homes after they file bankruptcy.

In many cases, you will be able to keep your home after bankruptcy. According to FindLaw, whether or not you can keep your home depends on the type of bankruptcy you file and your particular financial situation.

How does the type of bankruptcy matter?

If you qualify and file for a Chapter 13 bankruptcy, you will be able to keep your home. In fact, one of the biggest advantages to a Chapter 13 bankruptcy is that you will not lose any assets during the process.

If you file a Chapter 7 bankruptcy, there is a chance that you will lose your home. However, this depends on other financial factors.

How can I avoid losing my home with Chapter 7?

Much depends on the equity you have in your home. Equity is the value of your house after subtracting any mortgages or home equity loans you have. If your Equity is negative, the courts will exempt your home from the liquidation process.

However, if you do have to sell your home as part of your Chapter 7 bankruptcy obligations, there is the possibility of purchasing it back once the bankruptcy is complete. Additionally, in some circumstances it may actually be advantageous to lose your home as part of the bankruptcy process, particularly if you cannot afford your mortgage.