Is there a way to keep my home equity in a chapter 7 bankruptcy?

When it comes to a house in bankruptcy, filing Chapter 7 bankruptcy may mean that you will lose your home. Chapter 7 bankruptcy is the type of bankruptcy in which an individual is unable to continue to make payments towards debt and wishes to have that debt discharged. However, if you own property, the property is often sold to pay back creditors. There are exemptions to this, though.

How to Keep a Home

In order to keep your home during Chapter 7 bankruptcy, it is critical for you to apply the property bankruptcy exemptions, if they qualify. Here are some things to keep in mind in regards to bankruptcy exemptions.

• Many states offer bankruptcy exemptions that will protect the value of your home up to a certain level. Determine what your state’s exemption limit is.
• If your home’s equity value is below the exemption level, you may be able to keep your home.
• If your home’s equity value is higher than the exemption level, you may be forced to sell the property to repay the debt if the bankruptcy trustee can sell the home for a profit.

Keep in mind that if you have equity in your home, it may be best to file Chapter 13 bankruptcy instead since this is an asset based case. Nevertheless, discuss your options with a bankruptcy attorney to ensure you consider all options possible. Many people are able to remain in their home, but you do have to follow specific bankruptcy laws.