Is My House Safe In Bankruptcy?
When you have a car or a house, you need to go see a Bankruptcy Lawyer. Waltzer Law Group has New Jersey Bankruptcy Lawyers and New York Bankruptcy Lawyers.
Whether your house is safe or not is going to be determined only after professional review. The explanation below is not legal advice. It is a general summary.
There are several kinds of bankruptcy. Chapter 7 is the fast one- where you wipe out your debt in one shot. Chapter 13 is a long-term repayment plan, often used to catch up on mortgage payments.
Below we are going to talk about Chapter 7 bankruptcy.
Keeping Your House in Chapter 7 Bankruptcy
Rule Number One
The number one rule is that you can only keep your house if you stay current with your mortgage or modified mortgage.
Bankruptcy or no bankruptcy, if you don’t keep up with payments you will lose your house. There are a lot of scams out there promising people that they can keep their homes without paying f them. Forget it.
Rule Number Two
Never Lie To Your Bankruptcy Attorney About Your House and Who Owns It and Any Transfers or Refinances You Have Done. I can tell you if your house will be safe in a Chapter 7 bankruptcy, but ONLY if I know the facts. I would need to know the actual value of your home, the actual payoff amount for your mortgage and any other loans or liens on the house.
I will also have to know the title history – was it refinanced? When? What was done with the money? I will need to know how long you have owned the house and lived there. There is a lot of information I will need, but once I have it I can tell you with near certainty whether your house will be safe in a bankruptcy.
EXAMPLES OF HOUSES THAT ARE SAFE
We have filed bankruptcy for clients in NY who had a house worth $650,000 with a $340,000 mortgage. You read that correctly- the house had over $300,000 of equity and we were able to get the clients a Chapter 7 bankruptcy. We eliminated $80,000 of debt from credit cards and lawsuits.
We have filed bankruptcy for a woman in Westchester who had a house worth $400,000 and a mortgage of $250,000. We eliminated over $60,000 of credit card debt for her – and her house was 100% safe.
New Jersey has terrible protections for homes. The bankruptcy homestead exemption in New Jersey is about $23,000. So, if either of the houses in the examples above were in New Jersey, they would NOT have been safe.
Can You Protect My House In A Bankruptcy?
There are special laws that allow you to eliminate debt and protect a certain amount of value (equity) in your primary residence. These laws are called EXEMPTIONS. In parts of NY we can protect over $170,000 PER PERSON on title. So, we could potentially protect a $340,000 house that did not have a mortgage. Other parts of New York only allow us to protect $75,000. So, it is VERY important that you get professional help from a great attorney before you make any steps towards bankruptcy.
Remember, ‘protecting the house’ doesn’t mean saving you from foreclosure. It means that when you get rid of your other debt, the bankruptcy official wont take your house away.
The only kind of bankruptcy that can help you reorganize (catch up) on your missed mortgage payments is Chapter 13 Bankruptcy.
Make sure you have a GREAT bankruptcy attorney who is very thorough. If you don’t have a really thorough bankruptcy attorney, you might lose your house in bankruptcy. If your attorney is great, he or she will NEVER gamble with your house and you he will not file your case unless he can save your house. A good bankruptcy lawyer will always identify and communicate the risks to you.
If your house has equity, you will have to ask your attorney about exemptions in your state. It would be irresponsible of me to pretend that this could be explained on a website. For something this important, you must have a consultation with an attorney. Waltzer Law Group offers free consultations and we are knowledgeable about all the bankruptcy exemptions including the homestead exemptions in New York, homestead exemptions in New Jersey and Homestead Exemptions in California.