No matter how small or large your debt, a sudden job loss, debilitating accident, or other life change can quickly make that debt overwhelming. Bankruptcy may be the best option to get your life back on track, but the fear of losing your property could stop you from filing. Thankfully, though, filing for bankruptcy does not automatically mean losing everything. You will still have some choice in what happens to your property under California’s bankruptcy exemptions.
The property you may be most concerned about is your home. After all, losing your home would mean needing to relocate in the midst of an already stressful situation. The good news is that you can keep your home. However, if you would like to keep your home, you will need to be current on your mortgage and keep making payments.
Due to your financial burdens, you may be behind on mortgage payments. In this situation, it would be wise to renegotiate your mortgage prior to filing for bankruptcy. Your attorney can advise you on how to conduct this meeting, and you will need to proceed with caution, since your credit score is not likely very strong. A low credit score is not a strong position from which to negotiate, so be wary of new terms that might actually cost you more money or put you at risk of losing your home. There is no requirement for your lender to renegotiate your mortgage, but, faced with being forced to foreclose or wait on a sale as a result of bankruptcy proceedings, the lender may decide to renegotiate terms with you rather than risk losing money.
Chapter 7 Options
If you are not behind on payments and do not have much equity in your home, which is the difference between the home’s value and what you still owe, it is unlikely that you will lose your home. This is because California’s Homestead Exemption allows you to keep a home with anywhere from $75,000 – $175,000 of equity. The precise amount of your exemption depends on your age, marital status, and whether or not you are disabled.
Chapter 13 Options
When your home is worth more than the Homestead Exemption allows you, then a Chapter 13 bankruptcy may be more appropriate in your case. Since a Chapter 13 bankruptcy does not require the sale of your property, you can keep your home as long as you are and remain current on your payments. Keep in mind that those payments may change, as the focus of Chapter 13 is to work out a repayment plan which allows you to pay off a substantial portion of your debt over the course of three to five years, after which your debt is forgiven.
Contact an Attorney Today
The best way to ensure that you keep your home during bankruptcy proceedings is to contact an experienced bankruptcy attorney. The attorneys at Bankruptcy Law Center will be able to guide you to the bankruptcy option that is best for you and help ensure that you do not lose your home.