Posted on: 16 March 2021
Not only is a home is most people's largest investment, but it is also often their greatest achievement. Consequently, no matter the financial picture they face, many people want to seek relief through bankruptcy, but not at the expense of losing their home. Fortunately, there is a way to land on this goal, but it will take some planning and knowledge.
A Tough Conversation
When an individual files for bankruptcy, it is safe to assume that they are facing a scenario in which their financial picture is starting to spiral out of control. For this reason, it is a good idea to have some tough conversations. Although you want to keep your home, you should sit down and determine if it is doable and if it makes sense.
This step is important because if someone's home is the driving force behind their financial concerns, it may not make the most sense to try and keep the home. Once you have had this review, you will better know how to move forward.
Bankruptcy Filing Impact
Whether someone has an option to keep their home rests largely on the type of bankruptcy they file. The two primary options are Chapter 13 and Chapter 7. Chapter 7 fillings generally require you to sell any assets that can be used to pay off debts, including your home. Once all assets have been applied to the debts, the remaining balances are dismissed.
Chapter 13 involves a payment arrangement in lieu of off-loading your assets. Based on these standards, a person who wants to keep their home would typically need to file for Chapter 13 protection. An attorney will help you discover which option is best.
Equity-Based Buyback Options
With the law, there is always a gray area. One of these areas that impacts bankruptcy, particularly a Chapter 7 filing, is an equity-based buyback. With this process, you can use the equity in your home to pay off debts.
For instance, if the mortgage balance is considerably lower than the equity in the home, you can sell your home, use the excess to pay off debts, and then repurchase the home through the bankruptcy process. Keep in mind that this is a complicated mission, so you definitely need an attorney to help you navigate the process.
The importance of proper knowledge and planning is essential if you want to keep your home. Seriously consider working with an attorney to ensure you are on the right course. Contact a lawyer who offers bankruptcy attorney services to learn more.Share