While millions of Americans have found debt relief by filing for bankruptcy, there are still a number of different concerns one may have before filing. Among these lists of concerns, a fear of losing a home during the bankruptcy process is one of the biggest worries for many.
Like many things with bankruptcy though, what will happen to a home really all depends on a person’s individual circumstances. While some may be able to hold on to their home, others may end up having to give up their home. Still, others will weigh the pros and cons of having a mortgage and decide that it actually makes the most sense to walk away from having to keep up with monthly mortgage payments.
In Mississippi, individuals usually file for one of two types of bankruptcy: Chapter 7 or Chapter 13. While there are a number of differences between the two – and the type of filing is dependent upon a person’s financial situation – the rules around exemptions tend be quite different.
When it comes to keeping or losing a home, a big deciding factor will be how much the property is worth. With bankruptcy exemptions, there is a dollar amount. If the property falls under that dollar amount, the filer can normally hold on to it. However, the cut-off is different for Chapter 7 and Chapter 13, with Chapter 7 typically being a lower amount.
However, this is not the only caveat. For those considering Chapter 7, the trustee in the case is going to be focusing on the equity in the home. If someone has negative equity or very little equity, there is a good chance they will be able to have their homes exempt.
All of this being said though, there are plenty of homeowners who – upon careful examination of their financial futures – realize they want a restart with their finances and that it would make more sense to file for bankruptcy and give up their homes.
Since a person’s individual financial situation will greatly dictate exemptions, those thinking of filing are encouraged to reach out to a bankruptcy law attorney in order to talk more about their specific concerns.
Source: FindLaw, “Can I Keep My Home After Filing Bankruptcy?” accessed Oct. 28, 2014