Filing for bankruptcy can be an incredibly stressful experience. With all of the legal paperwork, not to mention any judgments passed down by creditors, you’re likely feeling overwhelmed and unsure of what will happen next.
One fear many people have is losing their house when they file bankruptcy; after all, it’s a major asset that often requires significant financial resources to maintain. Before you decide whether or not filing for bankruptcy is the right move for your circumstances, find out more about how this type of filing affects homeownership so you can make an informed decision.
Bankruptcy allows you to make a fresh start
For individuals and families in dire financial straits, bankruptcy can be an attractive option to relieve their debt burden. Contrary to popular belief, filing for bankruptcy does not necessarily mean losing your home. There are two types of bankruptcy – Chapter 7 and Chapter 13 – and each has different rules regarding property.
Chapter 7 bankruptcy is one of the most severe forms – it can lead to the liquidation of some assets, including your home. Much of it depends on how much equity you have in your home. Furthermore, there are both federal and Pennsylvania exemptions that you can claim, but it has to be one or the other.
Chapter 13 bankruptcy allows debtors to reorganize their finances and keep most of their assets, including their house. For those struggling with secured debt, such as a mortgage and unsecured debt, like credit card balances, Chapter 13 provides a dependable way to pay back creditors while staying in their home. They can keep the house if they make all the payments required under the court-approved payment plan in time and in full.
Filing for bankruptcy is a difficult and complicated process, and it’s important to get the proper guidance to help you through the process. Knowing the pros and cons of both types of bankruptcy and any exemptions you may be eligible for will allow you to make the best decision for your situation.