What Will Happen to My House in a Chapter 7 Bankruptcy Case?

If you are planning to file for Chapter 7 bankruptcy and you currently have a mortgage on a home, you likely have concerns about what will happen to your house. You might be considering bankruptcy in part because you have gotten behind on your mortgage payments and you are now facing foreclosure. Even if you are not facing foreclosure, you might be struggling to make mortgage payments and could be behind schedule by a couple of months. Combined with other consumer debt, you might be thinking that a liquidation bankruptcy is the best option to discharge your debts and to get a fresh start. What will happen to your home?

Many people assume that anyone who owns a home and files for Chapter 7 bankruptcy will lose their home, and this is not automatically true. Indeed, the answer to that question depends on a handful of different questions and issues, and we want to give you an idea of where to get started.

Is Your Home Going Into Foreclosure?

One of the first questions you will want to consider is whether you are behind on mortgage payments and, as a result, whether your home is going into foreclosure. If you are nearing the stages at which the bank might begin the process of foreclosing on your home, or if the foreclosure process has already begun, it will likely be difficult to keep your home if you file for Chapter 7 bankruptcy. When you first file for Chapter 7 bankruptcy, you will have the benefit of the automatic stay, which will prevent debt collectors (including your mortgage servicer) from taking additional debt collection actions against you. However, once it is clear that you are filing for a liquidation bankruptcy, if you are behind on your mortgage payments, your mortgage lender will likely ask the court to move forward with the sale of your home.

If you want to keep your home and you are behind on your mortgage payments, you should talk with a bankruptcy lawyer about whether you are eligible to file for Chapter 13 bankruptcy instead of Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the automatic stay can stop a foreclosure process from going forward, and then the debtor can get back on track with mortgage payments through the debt reorganization plan.

Are You Able to Exempt All of the Equity in Your Home?

If you do want to file for Chapter 7 bankruptcy and you are not behind on your mortgage payments, you will want to ask yourself whether you can exempt all of the equity in your home. Under the Illinois homestead exemption, you can exempt up to $15,000 of equity in your home, or up to $30,000 for spouses jointly filing a bankruptcy petition. If you are able to exempt the equity, it may be possible to keep your home in your Chapter 7 bankruptcy case.

Contact an Oak Park Bankruptcy Attorney for Assistance

Making the decision to file for personal bankruptcy can be a complicated one, and it is critical to have an experienced Oak Park consumer bankruptcy lawyer on your side to assist you. Determining how to handle your home in a bankruptcy case may be extremely complex, and you will want to have an advocate on your side with experience handling cases like yours. Contact the Emerson Law Firm to learn more about how we can assist you.


See Related Blog Posts:
Frequently Asked Questions About Bankruptcy Exemptions
Can I Purchase or Sell Real Property During a Chapter 13 Bankruptcy Case?

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more