When your debts become too much to handle, you could find yourself in the nightmare scenario of losing the house you worked so hard to acquire. The good news is that you may be able to remain in your cherished home and still get out from under all the debt by filing Chapter 13 bankruptcy.
How Property Is Handled in New York Bankruptcy
To find out how your property ownership will be impacted by going bankrupt, you need to understand the differences between the two main types of bankruptcy. With Chapter 7, property that isn’t exempted is sold to cover your debts. You are allowed to exempt your home, but only up to a certain level of equity. That amount varies depending on which county you live in, and a bankruptcy attorney can advise you on the current amounts for your specific location.
Chapter 13 works differently and doesn’t require you to sell off property. Instead, your debts are reduced and you pay off that lowered amount over a period of three to five years. By reducing the monthly amount paid on unsecured debts, you have more funds freed up to make your mortgage payments.
While that’s good news, there is still a danger of losing your home after filing Chapter 13 if you can’t make up overdue past payments or make regular payments on time in the future.
Planning for Keeping Your Home
Chapter 13 is obviously the better option if keeping your home is a priority. You need to be aware ahead of time that the choice of which type of bankruptcy to file may be out of your hands depending on the specific makeup of your finances and debts, however. A means test determines which type of bankruptcy you are currently eligible to file.
An attorney can explain how the means test works and which type of bankruptcy would work best for your situation. Your lawyer can additionally discuss other potential asset protection strategies if your primary reason for filing bankruptcy is just to keep the family home. There may be other steps to take that won’t have as devastating an impact on your credit and financial health.
Get Help From a Skilled Bankruptcy Attorney
Are you considering bankruptcy and are worried about the possibility of losing your home? Call Alatsas Law Firm today to set up a consultation. An experienced attorney can examine your situation to go over all the possible options and find the best route to protect what you’ve earned.