When a Louisville area resident reaches the point where they are considering filing for bankruptcy they are in a serious financial situation. A person can find themselves behind in their bills due to no fault of their own. An unexpected medical condition, job loss, or other unforeseen event can cause a person to wind up in a financial disaster situation. Sometimes bankruptcy is the best option for a person, but they may wonder if their home is at risk.
Most of the time a person who declares bankruptcy can keep their home. There are a few exceptions to this.
Failing to pay the mortgage
If a person doesn’t pay their mortgage, then the mortgage company will begin the foreclosure process. This is no different than if a person doesn’t file for bankruptcy. A Chapter 7 bankruptcy can delay the process until after the bankruptcy is complete, but the foreclosure will still go through once this happens.
Too much equity in the house
If a person files for Chapter 7 bankruptcy, they are allowed to have a certain amount of equity in their home. In Kentucky it is $23,675 for each person. If a person owns their house with their spouse, each of them is entitled to that amount for an exemption. If the equity exceeds that amount, then the bankruptcy trustee will sell the house. If a person has equity above that amount, then they should consider filing for Chapter 13 bankruptcy where their house will not be subject to liquidation.
A legal professional who is skilled in bankruptcy understands what their client is going through. They can help their client understand their options when it comes to bankruptcy and help them make a fresh financial start.