It is important to realize that bankruptcy is intended to provide you with a fresh start and free you from the burden of debt. This means that the court will not take everything you have; this would be counterproductive and lead to the opposite effect.
You file Chapter 7 bankruptcy to declare that you want to pay off certain debts. The trustee will then take over all non-exempt property and you’ll follow the rules and orders of the bankruptcy court. You will receive a discharge of some of your debts. This releases you from any dischargeable debts.
Protect Your Home
Protecting your home is only possible if you are able to exempt all your equity. It will all depend on these factors:
- Your mortgage must be current
- If you have the ability to make mortgage payments even after bankruptcy
- How much equity can you protect with a homestead exemption
- Your equity in your home.
It may be difficult to keep your home if you don’t pay your mortgage on time. Although the automatic stay will prevent your home from being foreclosed, it could only delay the inevitable. The mortgage you have is considered a secured debt. This means that it cannot be wiped out by Chapter 7 bankruptcy. If you don’t pay, the lender can foreclose your home. You cannot catch up on past due payments.
Understanding Bankruptcy
Contrary to what you may think, bankruptcy does not mean that you lose everything. Everything you owned once you file bankruptcy becomes part of your bankruptcy estate. Sometimes, bankruptcy filings allow people to keep all their property. Furniture, bedding, kitchen utensils/appliances and property that you need to work can all be kept. If you don’t need them, luxury items cannot be exempted. You should expect to have to give up luxury cars, boats, and timeshares as well as vacation homes and rental properties, as well investment and savings accounts when you file for bankruptcy.
The Chapter 7 trustee will then dispose of the assets and distribute the proceeds to creditors. It could be crucial to contact a bankruptcy lawyer to assist you with your case. A judge may not allow you to dismiss your case. And a mistake could result in you losing valuable property.
It is not an easy decision to make, and it is not something you should take lightly. As you think about your options and the next steps, there are many questions that will be on your mind. Expert attorneys are available to help you with your case.
This post was written by Trey Wright, a lawyer with extensive experience as bankruptcy attorneys in Panama City Florida! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, which specializes in areas related to bankruptcy law, estate planning, and business litigation.
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