Time and time again, one of the biggest concerns those throughout the nation, including Miami, seeking to file a consumer bankruptcy have a about the process is what will happen to their house. When one thinks about it, it is not surprising. For most who are considering filing a bankruptcy to address financial difficulties, it is their most highly valued asset. In addition, for many there is an emotional component, which makes it difficult to let go. Many who have only a little knowledge of the bankruptcy system may believe that the only way to keep one’s home while still benefiting from a bankruptcy filing is via a Chapter 13 filing.
The good news is this is not always the case. While there are definitely instances where a consumer will not be eligible to file under Chapter 7, but eligible for Chapter 13, in many cases it is possible to keep one’s home without going the route of a Chapter 13 bankruptcy filing. Generally, those who have little equity in their home will be most likely to qualify for Chapter 7.
It is important for anyone who is facing financial difficulty to take the time to explore all of the options available to him or her. This is because though both chapters provide a form of debt relief, they do so in very different ways. A Chapter 7 bankruptcy entails liquidating the assets of the filer. The proceeds are then used to pay creditors. In the case of a Chapter 13 filing however, the debt is reorganized and the filer makes regular payments on it for a period lasting between three and five years.
Which is best and whether one will be able to keep their home depends on the circumstances of the individual. A bankruptcy attorney can help to make that determination.
Source: FOX Business, “Can You File Ch. 13 if You Own a Home?” Justin Harelik, March 5, 2013