Will I Lose My Home If I File for Chapter 7 Bankruptcy?
For most of us, our home is one of our most treasured assets. In addition to being of monetary value, your home is your castle. It is the place you make your memories, rest your head, and store your most important items. If you are considering filing for bankruptcy, one of your first concerns may be what will happen to your home. In a Chapter 7 bankruptcy, there are several factors that will influence whether you get to keep your home. Our Xenia, Ohio Chapter 7 bankruptcy lawyers discuss the status of your home during bankruptcy below.
The Status of Your Mortgage
The court will first consider whether you are current on your mortgage. When you initially file for Chapter 7 bankruptcy, any foreclosure proceedings will be automatically stayed, but this does not mean that your mortgage debt will disappear. Chapter 7 bankruptcy will not offer a way for you to catch up on any overdue mortgage payments. Typically, if you are behind on payments, the home lender will ask the court to lift the stay and allow foreclosure proceedings to continue. The lender could wait until the bankruptcy is over to continue with foreclosure.
Ohio Residential Property Exemption
If you are up to date with your mortgage payments, you may have a way to keep your home during bankruptcy. You will need to first determine how much equity you have in your home. This can be calculated by subtracting the outstanding balance on your mortgage from the value of the home. If your home has no value, the bankruptcy court is unlikely to seize it because it would not be of value to the trustee.
Homes that do have value could still be protected if your equity is protected through Ohio’s bankruptcy exemptions. If the equity in your residential home is equal to or less than $145,425, it should qualify as exempt under Ohio bankruptcy law. Those with homes that exceed this amount of equity may be at risk of their home being sold to satisfy their debts.
Should you wish to keep your home, but find that it will be unprotected in a Chapter 7 action, you could alternatively consider filing for Chapter 13 bankruptcy. Your bankruptcy lawyer will review your options with you so that you can make the best possible decision.