Declaring bankruptcy is one that often comes during an overwhelming period of your life. If you are considering declaring bankruptcy, you are probably worried about managing your finances both now and in the future. For most, the greatest worry is that you may not get to keep your most prized possession ñ your home. Read on to gain some useful information so that you know exactly what to expect.
What Is The Probability Of Keeping Your Home After Bankruptcy in Kansas City?
Well, three main factors determine whether you will get to keep your home after bankruptcy. They are:
1. Type Of Bankruptcy
You can choose from two types of bankruptcies: chapter 13 and chapter 7. The two types have many differences but the major one is about the exemptions that you are entitled to. The assumption by the federal government is that everybody tries to pay off debt and that those with excessive debt need to sell it and pay off their debts. However, bankruptcy is meant for giving people a fresh start and not leave them impoverished. This is why both the state and federal governments often have exceptions. This means that if the property you own is valued less than a certain dollar value, you get to keep it. In general, chapter 13 exceptions are much higher, less strict, and offer more flexibility than chapter 7 exceptions. Therefore, if you file chapter 13 bankruptcy, you will have a higher chance of saving your home than if you were to file chapter 7 bankruptcy.
2. The Amount Of Equity That You Have In Your House
You need not worry even if you file chapter 7 bankruptcy since there are ways that you can still get to keep your house. Under chapter 7, when determining if your house is exempt, the trustee only considers the equity in your house. Equity refers to the market value of your house less the balance on your home equity loans or mortgages. Many people that file chapter 7 bankruptcy usually have little equity or even negative equity in their homes. Therefore, their homes are exempt and donít have to be sold during the bankruptcy. However, if the equity in your home exceeds the exception limit, you might have to sell your home to pay off your debt or ëbuy it backí from the trustee by paying the value of your home.
3. Can You Keep Up With Your Mortgage Payments?
Assuming that you managed to keep your home throughout the bankruptcy, you can keep it as long as you keep up with the mortgage payments. It may be that you are free from all the other debt you had and thus can easily afford the mortgage payments. If this is the case, you will get to keep your home. However, in case your income wonít alone you to keep up with the mortgage payments, the bank may have to foreclose your home. In conclusion, this article has looked at the chances of you keeping your home after a bankruptcy in Kansas City. Always remember that while filing for bankruptcy is helpful, it is better and easier to get control of your financial life to avoid such problems as facing the loss of your home.