Blog > 2021 > September > Can I File for Bankruptcy and Still Keep My House?
People get into financial trouble for many reasons, including medical emergencies, an unexpected loss of a job, or the illness or accident injuries of a loved one. They might be reluctant to file bankruptcy, especially if they are homeowners. So, you might be asking yourself, “can I file for bankruptcy and still keep my house?”. The short answer is yes.
If you are in financial trouble, regardless of the reason, contact a bankruptcy attorney at SM Law Group for a consultation and to learn more about your rights.
Whether you can keep your home depends on several factors, including how much equity is in your home. The short answer is that you can keep your home if you can exempt the equity in your home. This depends on how long you’ve owned your home and whether you are married or single.
The federal court and each state have several exemptions you can take when filing bankruptcy. The exemptions allow you to keep some of your assets. That way, you do not have to start over from scratch. One of the exemptions is the homestead exemption. The exemption amount changes frequently. Your California bankruptcy attorney will let you know the exemption amount if you need to file Chapter 7.
Equity is the difference between the value of your home and what you owe on it. For example, if your home is worth $500,000 and you owe $450,000, you have $50,000 in equity.
If you do not have any equity in your home, you can keep it because it has no equity for the bankruptcy court to use for other bills. If you have some equity, and it is below the exemption, you can also keep your house. However, if your equity is more than the statutory allowance, you might have to sell your home.
If you have too much equity and want to keep your home, you can try to file Chapter 13. However, you have to pass the means test to qualify for Chapter 13. You have to make enough money to have some leftovers after you pay your bills. You file a bankruptcy plan that shows how much you send to the bankruptcy trustee every month. The trustee uses this money to pay off some of your bills.
In a nutshell, Chapter 7 bankruptcy is liquidation. The bankruptcy trustee liquidates all your assets not covered with exemptions and uses the money to pay your bills. With Chapter 13, you create a payment plan over several years. You send monthly payments to the bankruptcy trustee, who then pays your debts in a specific order.
If you are in financial trouble, contact a California bankruptcy attorney at SM Law Group to learn more about your rights and options, especially if you want to keep your home.
If you are looking for ways to get debt-free, don’t hesitate to contact us today through our website or give us a call at to schedule your free consultation.
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