Can I Keep My House in Chapter 7 Bankruptcy?
You can keep your house in Chapter 7 bankruptcy if you are current on your payments and you can protect the equity in your home. In order to protect the equity, you need to file a bankruptcy exemption on your house. If you cover the equity, you may keep it. If not, the trustee overseeing your case will sell it.
Do You Lose Your House in Chapter 7 Bankruptcy?
You can lose your house in Chapter 7 bankruptcy if you are unable to protect the equity. If you can protect the equity, and you are currently on your payments, then you may be able to exempt your home and keep it.
Can You Buy a House After Chapter 7 Bankruptcy?
Buying a home after Chapter 7 bankruptcy may be difficult, but is likely still possible. The usual waiting period required by lenders is two years. After that, you are free to apply. The FHA also offers loans with more lenient credit requirements than traditional lenders.
Can I Buy a House After Filing Chapter 7 Bankruptcy?
Buying a house after filing Chapter 7 bankruptcy is possible, but only after some time. Getting a loan during the bankruptcy process is likely not possible, and you must wait at least two years after discharge or dismissal to qualify for a home loan.
Can I Keep My House in Chapter 7 Bankruptcy FAQs
What Is Bankruptcy?
What Is Bankruptcy? The Three Chapters of Bankruptcy
There are three common types of bankruptcy known as “chapters”in the U.S. bankruptcy code, Ch. 7, Ch. 11, and Ch. 13, each with varying criteria and consequences.
Ch. 7 Bankruptcy
The most common type of bankruptcy is Chapter 7. Chapter 7 bankruptcy is known as “straight”or “liquidation”bankruptcy. It is designed to give a “fresh start”by discharging debts that cannot be repaid through the liquidation of the debtor’s assets. Upon filing Chapter 7, a trustee is appointed to sell the debtor’s non-exempt assets and distribute the proceeds to creditors. For individuals, the law exempts certain assets such as retirement funds, primary residence, tools for their trade, and personal vehicles from being liquidated to pay back creditors. This pays back creditors some of what they are owed and protects individuals from having all of their livelihood taken from them.
Ch. 11 Bankruptcy
Chapter 11 bankruptcy is primarily for companies, allowing them a break on paying their debts in order to restructure, come up with new terms for paying their creditors, and become profitable again. This allows companies to stay afloat while coming up with a new way to pay back creditors. Chapter 11 is the most complex and expensive form of a bankruptcy proceeding and should therefore be considered after other options have been explored.
Ch. 13 Bankruptcy
Chapter 13 bankruptcy, known as a “Debtor in Possession” Bankruptcy, stands in contrast with Chapter 7 because it allows the individuals to keep from liquidating their property. Chapter 13 creates a new, more affordable payment plan for the debtor to repay creditors, usually lasting 3 to 5 years. Once the payment plan is finished, the remaining unsecured debts are discharged.
You Can Avoid It
Bankruptcy is the least thing any business would want to experience. But sometimes because of reluctance, many business owners limit themselves from exploring the many benefits of getting help from financial advisors. Financial advisors can be a great help in steering a business to the path of profitability. Connect with a financial advisor in Beachwood, OH or check out our financial advisor page to see one closest to your area.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.