How secure will your home be if you file Chapter 7 bankruptcy?
On behalf of The Rollins Law Firm posted in Chapter 7 on Friday, August 30, 2013.
Mississippi residents who are considering filing Chapter 7 bankruptcy to achieve relief from their credit card debts might be wondering if their homes will be secure when they file. This is a question that numerous people ask when they are considering filing bankruptcy. Confusion about the issue may also prevent some people from filing bankruptcy for fear of losing their homes.
When people file for bankruptcy, trustees are assigned to their cases to determine the value of their property. Trustees usually launch an investigation into the value a home has, and they may try to sell the home to pay creditors. However, if the value of a home is not deemed sufficient to cover debts, then trustees must conclude their investigations and grant people their Chapter 7 bankruptcy relief.
However, trustees may decide to leave people's bankruptcy cases open for a few additional months to see if the value of the property is going to rise any. Yet, they cannot leave cases open indefinitely, simply waiting for properties to accrue equity so that they can be sold to cover debts. Generally, Chapter 7 bankruptcy cases are closed within three to six months of their filing dates. Basically, trustees cannot keep bankruptcy cases open for years waiting for properties to accrue enough value to be useful in settling debts.
When people file for bankruptcy, they are required to provide full disclosure about their assets, including any vehicles, real estate, bank accounts, retirement accounts and more that they own. Instances where trustees may keep cases open for a few months are those in which people file on the borderline of being about to protect their home's equity. Bankruptcy lawyers could be able to assist people with ensuring that they provide full disclosure when they file their bankruptcy forms.
Source: Fox Business, "How safe is my home in a Chapter 7 bankruptcy?", Justin Harelik, August 21, 2013