As a Charlotte bankruptcy attorney, one common fear I encounter related to filing bankruptcy is the fear of being able to keep your home in bankruptcy. Fortunately, for most clients, there is a bankruptcy option which allows them to keep their home and still receive the benefit of a discharge of numerous debts.
In a Chapter 7 bankruptcy, the primary considerations for keeping a home in bankruptcy are 1) you are current on your mortgage on the filing date, and 2) you have no more than $35,000 in equity in the home ($70,000 for married couples). The federal bankruptcy code allows you to keep your home in bankruptcy despite having equity, as a result of the Homestead Exemption in Section 522(d)1) of the bankruptcy code.
In order to exercise the Homestead Exemption, you or your dependent(s) must reside in the property as your primary residence. The Homestead Exemption extends the ability to keep your home in bankruptcy to mobile homes and houseboats.
What If I’m Behind On My Payments?
If you’re behind on your payments but would like to keep your home in bankruptcy, you should consider a Chapter 13. A Chapter 13 payment plan incorporates your monthly mortgage payment in addition to the amount you’re behind on the day of filing. Over time, when making payments in your Chapter 13 plan, you stay current on your mortgage and make up the arrearages. At the conclusion of the plan, you still own your home while eliminating all other dischargeable debt .
If you have questions about bankruptcy or would like to discuss how to keep your home in bankruptcy, please call me at 704.749.7747.