It is easy to feel as though your life is spiraling out of control when you are facing an increasing and unmanageable debt. Filing for bankruptcy protection may be an option if you are facing more debt than you are able to manage.
One major concern for homeowners when trying to decide if filing bankruptcy will be beneficial to them is the question: “Can I keep my home if I file for bankruptcy protection?”
You can completely eliminate most debt that is unsecured. Unsecured debt is money you owe without promising your property as collateral for the debt. In a Chapter 7 bankruptcy proceeding, you can discharge mortgage debt by giving up your home. If you wish to keep your home, or other property with secured debt, filing for Chapter 13 bankruptcy protection will allow you to repay the debt over a period of time. This tactic prevents creditors from repossessing the property as security in order to collect the debt.
When you file for Chapter 7 bankruptcy protection, Missouri law exempts certain types of property (i.e., vehicles and household goods) from debt liquidation up to a certain value. If you own your home, you can protect a maximum of $15,000 of the home’s equity or a maximum of $5,000 if it is a mobile home.
This is called a “Homestead Exemption” and will allow you to protect the asset by placing it in a protected class and removing it from your resources that the bankruptcy trustee will use to satisfy your debt. If you have no more than $15,000, or $5,000 if it’s a mobile home, in equity in your home, the Homestead Exemption can be used to prevent the property from being seized by the bankruptcy trustee so that you can still own your home.
The Homestead Exemption is complicated, but there are many exceptions to the rule and an experienced bankruptcy attorney can help you if the equity in your home is greater than $15,000, or $5,000 as the case may be, that will protect it during a bankruptcy proceeding. One such strategy is negotiation of a reaffirmation of the debt, in which you remain responsible for the debt, even if it could be discharged, but get to keep the property. In a debt reaffirmation, the lender agrees to not repossess the home as long as you continue to pay the debt.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.