Are you trying to keep your home even though you're in debt? A chapter 7 bankruptcy or a chapter 13 bankruptcy could potentially help you avoid losing your home. Most people assume that they will lose their property when undergoing the process of bankruptcy but this isn't necessarily true.
Depending on your state laws, you may be able to keep your home and declare bankruptcy to dissolve or restructure your debts at the same time. A real estate attorney can help you find out more.
You Can Delay Foreclosure Proceedings
If you're currently in the process of foreclosure, beginning the process of bankruptcy will stop it. A bank cannot foreclose on a property while you're declaring bankruptcy -- and this is even true if you ultimately do not finish the bankruptcy proceedings. Usually the first step that a bankruptcy attorney will take is to notify your mortgage company so that the foreclosure can be stayed.
You Can Create a Reaffirmation Agreement
If you will be able to afford your mortgage following debt restructuring or debt settlement, you may be able to create a reaffirmation agreement. This is basically an agreement that allows the lender to create the debt again after the bankruptcy proceedings. A real estate attorney will be critical to this process. The bank lender will also need to approve the reaffirmation agreement for it to stand.
You Can Claim It as Exempt
If the property is your home residence, you may be able to simply claim it as exempt. This is usually only true if you own your property outright and if the property is not excessive in value. A real estate attorney can explain the exemption limits to you, which will vary by state and will often depend on the local average costs of real estate in your area.
If you have a property with low market value that you have had in your family for a long time, you have a greater chance of being able to keep it.
That is not to say that keeping a home during the process of bankruptcy is always a good idea. A real estate attorney and a financial adviser will both be able to help you determine whether you want to keep your home and whether it's a good financial decision for you. If you decide that you don't want to keep your home, you can instead include it within the assets that are dissolved through the bankruptcy.
To learn more, contact a professional like Michael Adler with any questions or concerns you have.