Last week, we discussed short sales and how those types of real estate transactions can help to keep you from having a foreclosure on your credit report. For some of our Miami readers, a short sale might not be a good fit for a variety of reasons. One of those reasons might be the need to stay in your home. In that case, filing for Chapter 13 bankruptcy might help you to stay in your home. This is because your home might qualify as exempt property in the bankruptcy case.
When you are considering a bankruptcy filing, the exempted property is often a huge consideration. There are value limits on what can be claimed as exempt property in these cases. As such, it is important for you to find out if your home will qualify for an exemption before you make the choice to file.
There are a few considerations about exempt property that our readers should know. One of these is that secondary home, such as vacation homes or rental homes, aren’t considered exempt property. Only your homestead or primary home is considered an exempt property.
Another consideration is that the value of the property you have exempted in your case is often used as a bottom line for repayment of your debts. In most cases, this means that you will have to pay back at least the value of your exempted property as part of your bankruptcy repayment plan.
A Chapter 13 bankruptcy filing means that you will repay your debts over time. This means that there is less incentive for your assets to be sold and used to pay off those debts. If you think this is the type of bankruptcy that best suits your needs, you should work to understand how it will affect you. That includes learning whether your home will qualify as exempted property or not.
Source: FindLaw, “Exempt Property in a Chapter 13 Bankruptcy” accessed Feb. 18, 2015