The threat of home foreclosure can be terrifying as you struggle to keep up with payments or look for ways to keep a roof over your family’s heads. With the housing crisis and recession, simply selling a home that is unaffordable is not always a feasible plan, as many Florida homes may still not be worth the amount owed on an existing mortgage. One option for avoiding home foreclosure is bankruptcy. However, it is vital to understand which type may work best if the intent is to keep your house.
Filing for bankruptcy can immediately halt the foreclosure process, at least temporarily, but it may not necessarily result in getting to keep your home. Chapter 7 is the most common type of bankruptcy filed and can provide huge economic relief. While other debt, such as credit card debt, can be discharged under this type of bankruptcy, the foreclosure process may still be pursued, and you could ultimately lose your home.
Chapter 13 may be the best option if a home is at stake. This type of bankruptcy is essentially a repayment plan that can give you time to catch up on payments. The repayment plan can give you up to five years to pay past-due mortgage payments, and you get to keep your home while complying with the payment plan.
The U.S. Bankruptcy Code allows filers to keep certain property, but, in Florida, qualified residents may not use the federal exemptions. Instead, you are to use the state’s property exemptions. Fortunately, Florida is quite generous. After meeting certain conditions, you will be allowed an unlimited homestead exemption, which means that the entire value of your home will be exempt. However, if you do not meet the requirements, you will be required to use the federal exemption, which only allows a certain amount of your home’s value to be considered exempt.
Bankruptcy can be complicated and you may be concerned that you could lose everything for which you have worked. However, with proper guidance and assistance, you may find it is the best way to ensure that you keep your house. Our website has more information that may help you determine which type of bankruptcy may meet your needs.