Often people are worried about losing their home when considering filing for Chapter 7 bankruptcy. The fear of losing their home often inhibits people from filing for bankruptcy protection regardless if there is any equity in the home or not. A bankruptcy homestead exemption is the amount of equity that can be protected in your particular state. Each state a different bankruptcy homestead exemption and you’ll need to know what that amount is in your particular state and how this affects you.
A bankruptcy case where there is an asset in the home can be held open a bit longer than a regular case, although it can’t remain open indefinitely with hope that property values will continue to rise. Normally, a typical case is closed anywhere from three to six months after filing for the bankruptcy and it may not be reopened years later after equity has been built up in the property. Many bankruptcy trustees are trying to short sale houses, however this practice also varies from state to state, depending on the market. A trustee is someone who is assigned to your particular case when you file for bankruptcy. This person wants to sell any unprotected assets to pay as much outstanding debt as possible. They can decide very quickly after a case is filed if there is a value issue or if you are allowed to receive the relief a bankruptcy can provide. Bankruptcy is not always a good option for homeowners who have a lot of equity in their home.
You must disclose all your assets, including current bank account balances, retirement and investment accounts, vehicles, and property value upon the date of the filing. The value of homes is on the rise and a case may be held open for a few additional months to determine whether or the value of the home continues to increase. This is especially the case when a person is on the borderline of being able to protect the home’s equity. The trustee must make every effort to sell the house during this time and cannot indefinitely wait for the market to continue to go up while keeping the case open. You must make sure to proceed with caution and be well informed of the risks involved with your particular case. Bankruptcy can still be an option for many homeowners. Don’t let the fear of losing your house keep you from considering the option of filing for bankruptcy.
For more information on the benefits of filing for bankruptcy in your situation, get in touch with Westgate Law where an experienced southern California bankruptcy attorney is available to answer your questions.