As someone who is struggling to keep up with your finances, you may be exploring your options and trying to determine which one is best for getting back on your feet. You may know that bankruptcy is one method many people struggling to stay afloat financially choose to get their financial lives back on track, but you may have questions or concerns about the process. More specifically, you may want to move forward with filing for bankruptcy, but you may be hesitant to do so because you fear it may cause you to lose your home.
Many people who are considering filing for bankruptcy wonder whether doing so will cause them to lose their homes, but unfortunately, there is no single, black-and-white answer to this question. Instead, it depends on several factors, among them how much equity you have in your home and which type of personal bankruptcy filing you choose to pursue.
Will you lose your home if you file Chapter 13?
Chapter 13 bankruptcies are typically an option for people who are able to pay back at least some portion of the debts they owe. As a homeowner filing for Chapter 13, you can typically keep your house, provided you stay on top of whatever type of restructuring or repayment plan you established when you filed. Keep in mind, however, that you must stay current on your mortgage payments after filing for Chapter 13 – otherwise, all bets are off, and you may end up losing your home, after all.
Will you lose your home if you file Chapter 7?
The answer to whether you will lose your home when you file for Chapter 7 bankruptcy is a bit more complicated. Ultimately, whether you can anticipate losing your home comes down to how much equity you have in your home, and how the amount of equity you have compares against the exemption amount the state of Tennessee allows.
No two bankruptcy cases are the same, so keep in mind that what holds true for, say, a friend or neighbor who files for bankruptcy may not do the same for you.