One of the common reasons that people give us for not wanting to file for bankruptcy is that they are afraid that they will lose their homes. The answer to that question depends on what type of bankruptcy they are filing and how much equity they have in their home. It is possible to lose a home in bankruptcy, so you should choose the right kind of bankruptcy.
A Chapter 7 bankruptcy is a liquidation of the debtor’s assets. Usually, the home is considered an asset. Tennessee allows for a homestead exemption when the equity in the home is worth more than the amount that is owed. The exemption is for a limited amount of money. If the homeowner has more equity than that, the home can be sold. The homeowner will get a check for the amount of the exemption. However, bankruptcy protection will not help if you are behind on your mortgage. Then, your home can still be foreclosed upon.
If you are in Chapter 13 bankruptcy, you can keep your home. Chapter 13 bankruptcy restructures your debts and gives you additional time to pay. There is no liquidation of your assets. You are able to take extra time to get your credit in order with some breathing room from your creditors.
If you own a home where you have equity, you need to think carefully about which type of bankruptcy you want to file. The consideration is easier when you are upside down on your mortgage. We can help you examine your options and choose the right course of action for you.
Call a Memphis Bankruptcy Lawyer
If you are facing a mountain of debt and are running out of options, the Hurst Law Group can help. Call us at 901.725.1000 or message us online to discuss your situation.