If you are facing insurmountable financial challenges, filing for bankruptcy might be a consideration. However, the prospect of bankruptcy can raise concerns about the fate of your assets, especially your home.
There are a few things you should know about how bankruptcy affects your home.
Chapter 7 equity considerations
When filing Chapter 7 bankruptcy, the court orders the liquidation of any non-exempt assets to pay your debts. Kentucky has an exemption allowance for your home, but only if the equity you have in your home is below the exemption limit. Check the current exemption limit to determine your eligibility to keep your home.
Chapter 13 repayment plans
Chapter 13 provides the opportunity for restructuring your debts, which means you can keep your assets and repay them over a predetermined period. If you can make your required mortgage payments in addition to your bankruptcy repayment obligation, you can keep your home under a Chapter 13 bankruptcy.
Financial stability
One important factor in deciding to keep your home after bankruptcy is your financial position. Remember that keeping your home means making the mortgage payments in a timely manner. Consider the expenses associated with your mortgage, your bankruptcy settlement and any other obligations to ensure that you can meet those commitments.
Filing for bankruptcy provides you with the opportunity to reclaim your financial situation. The U.S. courts recorded more than 416,000 bankruptcy filings in 2023. If you are thinking about filing for bankruptcy but worry about keeping your home, evaluate your financial position carefully to ensure that you can meet the obligation.