Your home is not just a place where you lay your head at night. It is the one place that you can consistently look to for comfort and privacy. It is often a place where families are raised and where long-lasting memories are made. Unfortunately, many people go through a financially difficult time at some point in their lives. During these times, many people look to bankruptcy to shed debt and get a fresh financial start. Unfortunately, those looking to start over through bankruptcy may lose their home in the process. Let’s take a closer look at how bankruptcy affects your home or rental property.

Rental Property & Chapter 7 Bankruptcy’s Impact

Most individual bankruptcy filers will either opt for a Chapter 7 or Chapter 13 bankruptcy. Both options have their advantages and potential pitfalls. Depending on your specific circumstances, one form may be better suited for you than the other. It is also possible that neither option makes sense for you.

For purposes of saving your home or rental property, Chapter 7 may not be the best route. Chapter 7 is often referred to as liquidation bankruptcy. It involves selling off practically all your assets (possibly including your home) to pay your creditors. Still, you may be able to save your home or rental property through Chapter 7 if you can successfully place your property on an exempt list. State and federal law determine which property is exempt. It is recommended that you consult with an experienced bankruptcy attorney to find out if your home can be exempt.

Rental Property & Chapter 13 Bankruptcy’s Impact

Chapter 13 is known as the wage earner’s bankruptcy. This form of bankruptcy is typically utilized by individual filers who still have significant income that can be used to repay eligible debts through a court-approved repayment plan. The repayment plan can include back (past-due) mortgage payments. In most cases, Chapter 13 filers who remain current on both their repayment plan and their monthly mortgage payments are able to hold on to their home and rental properties.

With both Chapter 7 and Chapter 13, holding on to your home will greatly depend on a number of factors. One of the more important questions will be whether your home has equity in it. Homes without equity (the amount owed is greater than the value of the home) typically won’t be sold in bankruptcy as long as you remain current on your mortgage. However, homes with equity face a greater likelihood of being liquidated as the proceeds can be used to pay off other debts.

Florida Bankruptcy Lawyers Are Here For You

No one wants to lose the roof over their head. If you are at risk of this happening to you, then it is crucial that you consult with a bankruptcy attorney. The Bankruptcy Team can provide you with expert guidance to ensure that you have the best chance of holding on to your home or rental property. To consult with The Bankruptcy Team, PLLC, call or contact us today.