do you lose your house automatically now with bankruptcy?

Answer 1

First you have to decide what chapter you are filing under. You may be eligible for chapter 7, which would discharge all of your debts. However, before you make that selection, you have to see whether you are eligible for that chapter. In general, if you make more than the national median income, you may not be. This depends on the "means test" which you can take by filling out a form 22 available on your bankruptcy court's website. You may need a lawyer's help for this.

If you are filing under chapter 13, you won't lose your house, but you will have to pay up to 5 years of disposable income to a trustee toward the payment of your debts. And your payments will have to be at least as much as would be available to pay your debts if your house was sold.

This gets us to the question of "equity". The difference between your house's value and how much you owe on the house is "equity". From the number, you can deduct how much is exempt under state law. In Illinois, for example, $15,000 per person, up to 3 homeowners is exempt.

Say your house is worth 400,000. Say there is a $200,000 mortage. There is $200,000 gross equity and $170,000 after taking into account exemptions.

On the other hand, if the house was worth only $225,000 and a $220,000 mortgage, than there is no equity after the homestead exemption.

In the first case, a trustee could sell your house unless you were paying your creditors pretty much in full in chapter 13 (I assume you have less than 170,000 in unsecured debt). In the second case, you have no equity and the trustee will not sell your house. And you would have no need to file a chapter 13 case if you made less than the median income or otherwise passed the means test. In that case you could file chapter 7 and keep your house as long as you make normal mortgage payments, keep the insurance paid and the taxes paid normally.

Answer 2

No it depends on which level of bankruptcy you are doing. A chapter 11 reorganization allows you to just restructure the debts owed and prepose a payment plan to the creditors that will satisfy all debts plus 8.5% interest over a 7 year period. If a plan cannot be confirmed by the Judge then they might suggest a chapter 13 or a 7 where in fact they would liquidate your assets to cover the debts outstanding. If you dont have enough assets to cover the outstanding debt, without the liquidation of your home then you might be losing your home depending on how much equity you have in it. If there is enough equity to to cover all of your outstanding debts then its time to refinance or sell your home that way you might be able to keep any potential profit. If you let the bankruptcy court take over you will lose out on any equity etc. just in court fees and interest. Good luck thats a crappy situation to be in!

Answer 3

Most states have a homestead law that will generally protect your equity up to a limit, provided you exclude your mortgage from the bankruptcy. Discuss your options with your attorney.

Answer 4

no longer something. the present mortgages could be bought off to settle the BK sources of the agency. you are able to likely could deliver your loan funds to a diverse deal with yet even it truly is no longer an absolute. it truly is totally accessible that you're making your funds to a loan servicing organization and the hot holder of the interest could proceed to apply an identical servicing organization. At any price, your loan will proceed to be in finished stress and result see you later as you save making your funds in accordance to the loan settlement.

Answer 5

If you are broke then you don't have a house.