If you are considering filing Chapter 7 bankruptcy and are unsure how your home and mortgage will be affected there are several things you should know.
When you file for bankruptcy you need to know that all of the property you own at the time of your filing and in some cases property you will receive at a later date is attached to that bankruptcy. This property will be taken by the bankruptcy court and sold to pay your creditors. There are however, exclusions that may allow you to keep your home. What property or assets can be excluded depends on your situation, income, and the state that you live in. The best we to find out if you’ll be able to keep your home is to contact an attorney.
Many states will exclude up to $100,000 in home equity. When determining the value of your home make certain you are appraising its value based on forced liquidation instead of ideal selling conditions. When you have an appraisal of your homes value deduct the amount you owe along with the fees and expenses for the sale from the value; the amount left over is your equity.
For your personal property many states also allow exemptions for various items; these personal effects include your household contents, vehicles, personal items, retirement plans, jewelry, pets, and other personal effects. The actual value of the exemptions you will receive depends on your circumstances and the bankruptcy laws of your sate. Your attorney will be able to tell you how your state’s laws will affect your bankruptcy. Bankruptcy laws do vary from state to state.