Bankruptcy Basics, Debt

How can I Keep my Home after Bankruptcy?

Your home is often your single largest asset, and you may want to protect it during your bankruptcy. If you own your home and you want to continue living in your home after filing bankruptcy, you need to plan in advance. Whether or not you can keep your home depends largely on whether you file Chapter 7 bankruptcy or Chapter 13 bankruptcy. It also depends on how you treat your mortgage debt during your bankruptcy.

Keeping your Home during a Chapter 7 Bankruptcy

In Georgia, you can often choose to file for Chapter 7 but still protect your home and keep it after you file. You may be able to maintain a certain portion of your home equity, but you may also have to give up some equity to help pay off your debts. It is critical that you speak to your attorney about this up front so that they can help you understand your options. (Asking about this situation during your initial free bankruptcy consultation is a good idea.)

You should gather as much information about your home mortgage as you can before your bankruptcy consultation (just as you should with all of your debts). How much you owe, how long you have lived in your home, and how much your home is worth will all be important facts. Also, whether you are behind on your payments and by how much.

Depending on your circumstances and where you live, you may own more equity in your home than is permissible during a chapter 7 bankruptcy. If that is the case, you may have no choice but to sell your home to help pay off your debts. The rules surrounding this are complex, and a personal answer is important.

If you are under that equity threshold, you may need to reaffirm your mortgage debt during your bankruptcy filing. This basically means that you are excluding your mortgage debt from your bankruptcy, and you agree to continue paying that bill as you did before your bankruptcy. This may be one way for you to keep your home.

How to keep your Home during a Chapter 13 Bankruptcy

A Chapter 13 bankruptcy is quite different than a Chapter 13. In Georgia, if you file a Chapter 13 bankruptcy, you will continue making payments on your debts and in many cases you will keep your property. But your attorney will work with your lenders to establish a new payment schedule that you can afford (often by lengthening the term of your loan).

This can be a good option if you have an income, and wish to keep your property (including your home), but you can’t quite afford to pay your current bills and make ends meet. Your attorney can help you determine whether a Chapter 13 is likely to give you the relief you need, or if you are better off filing a Chapter 7 bankruptcy.

If you qualify for a Chapter 13 bankruptcy, and want to keep your property, it may be an attractive option. However, keep in mind that you must continue paying your debts. If you find yourself unable to afford your bills even after renegotiating the terms, you may end up back in the same situation again. This is a trap that your attorney can help you avoid.

Assuming you have the right financial situation, and you’ll be able to afford your bills, consider a Chapter 13 bankruptcy. The advantage is that since you agree to new terms with your lenders, you keep your home, your car, and any other property that you owe payments on.