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Do you automatically lose your home if you file for bankruptcy?

On Behalf of | Nov 23, 2021 | Bankruptcy News, Chapter 13, chapter 13 bankruptcy, Credit Card Debt, medical debt | 0 comments

Many people across Kentucky find it difficult to stay atop of their financial affairs, and this may be due to unexpected medical debt, mounting credit card debt or something else. If you find yourself among those struggling to get your head above water, you may be considering filing for bankruptcy but wondering whether doing so could put your home at risk.

According to SFGate, losing your home when you file for bankruptcy is not definite. Instead, there are many situations in which you may be able to file for consumer bankruptcy and still keep your home.

Chapter 7 bankruptcies and your home

There is a chance you may have to give up your home in a Chapter 7 bankruptcy. However, whether you must do so depends on how much equity you have built up in it since you bought it and how much of that equity is “exempt.” If you have fallen way behind on your mortgage payments, you may find it more difficult to keep your home with a Chapter 7 bankruptcy than you would if you were current on them.

Chapter 13 bankruptcies and your home

A Chapter 13 bankruptcy requires that you restructure your assets and come up with a plan to pay back some of your outstanding debts. If you stick to the plan and also keep current on mortgage payments during the payback period, you should be able to remain in your home with a Chapter 13 filing.

In some instances, it may make financial sense to consider relinquishing your home even if your situation does not force your hand.