How to File for Bankruptcy Without Losing Your Home
Have you been thinking about filing for bankruptcy protection as a way to get a fresh financial start? Each week, thousands of people file bankruptcy to eliminate the stress of overwhelming debt. Many others put off filing, because they are afraid they will lose their homes after the bankruptcy petition is discharged. Filing for bankruptcy protection doesn't have to mean giving up your house--there are ways you can retain your home while still getting the financial relief you need.
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Instructions
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Locate an attorney in your area who specializes in personal bankruptcy cases. Let your attorney know you intend to keep your home, so he can help you find the best solution for your circumstances.
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Work with your attorney to determine whether you should file for Chapter 7 or Chapter 13 bankruptcy protection. If you have relatively little equity in your home, and you simply want to wipe out your unsecured debts, Chapter 7 may be the more attractive option. If you have substantial home equity, your attorney may advise you to file for Chapter 13 protection instead.
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Collect all information necessary to file your bankruptcy petition and give it to your attorney. He will need documentation showing your present and past income, your debt amounts and the amount of equity you have in your home. He will also need a list of all of your creditors, including names and addresses.
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You can keep your house in a Chapter 7 filing if you do not have substantial equity in the home. Although the court will ultimately decide whether your home equity is "substantial," it will usually let you agree to continue making mortgage payments. This agreement is called a "reaffirmation." Mortgage lenders are typically happy to reaffirm a loan, because they know you will have more funds available to make your mortgage payments on time.
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If you have too much equity in your home, or you do not meet the income restrictions for Chapter 7, you can opt for Chapter 13 bankruptcy protection. This type of bankruptcy reorganizes your debt, allowing you to pay a portion of your total debts over a three-to-five-year period. In many cases, the bulk of your monthly bankruptcy payments will go to your mortgage lender. At the end of the repayment period, you can keep your home as long as you have made your payments as agreed.
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Tips & Warnings
When you compile information about your income, debts, home equity and creditors, double-check everything to make sure it is correct. Errors can substantially delay the bankruptcy process and can even cause the court to dismiss your case.
