One of the primary concerns many people have when trying to determine if bankruptcy is right for them is whether or not they will have to pack up and move out of their home. If they do, will they have a difficult time gaining approval for a rental? Knowing you can keep your home in some circumstances may come as a great relief to many.
One primary consideration is whether or not you can afford the mortgage payments, assuming you are able to keep your home in the bankruptcy. Discharging debt or reducing owed amounts while creating a repayment plan over years may leave you with an easier time making your monthly mortgage payments. However, if you have been burdened with a hefty mortgage payment each month, foreclosure does offer the opportunity to get out from under it and walk away without additional penalties in many cases. So if your payment is something you are unlikely to ever comfortably afford, you may need to do some heavy thinking about whether or not you want to struggle to carry that burden.
A second factor in keeping your home is whether you are filing for Chapter 13 or Chapter 7 bankruptcy. If the value of your property falls beneath a particular margin of worth set by the government, you can keep your home. However, Chapter 7 exemptions are more rigid and harder to qualify for, making Chapter 13 the more favorable bankruptcy for home retention.
Finally, the courts will look at the equity you’ve built in your home. If you filed Chapter 7 bankruptcy and do not have significant equity built up in your home, they won’t take it. Equity is the value of your home once you subtract the remaining mortgage amount owed. Therefore, if your area has depreciated and your house has lost value, the negative equity will ensure your house is not sold at a loss. For instance, if you bought your house for $275,000 and owe $265,000 on it but the home is valued at $250,000, you owe $15,000 more than it is worth and therefore, you would gain additional debt.
If you want to keep your home but think bankruptcy may be right for you, you may benefit from having your questions answered by a Florida bankruptcy attorney. He or she may be able to put your mind at ease, as well as your finances.