Declaring bankruptcy is a big, stressful, difficult decision. There are many questions to ask, and for which you need expert, comprehensive answers. One of the biggest questions that people have is around the question of their personal property. How much will we be able to retain? What must be surrendered? Will I automatically lose my home? It is important to get expert, legal advice as you make these decisions. However, this article will try to answer some of these questions. Any individual or family’s personal circumstances will differ from another’s, however. These are simply general guidelines.
Often the first question, the one of most immediate importance is: will I lose my house if I declare bankruptcy? There is no quick “yes” or “no” answer to that question. Much will depend on how much equity you have acquired in your home over the time you have occupied it. When you file for bankruptcy, there is a special category of possessions called “exempt property”. There is a formula that the court will use to determine whether or not you can retain the house and not have it liquidated (sold) as part of the bankruptcy. The court recognizes that you will still need a place to live and they took that fact into consideration when designing the formula.
The rule is that if the fair market value of your home, minus any liens or mortgages against is subtracted from the equity that you currently have in the home. The amount of your home’s bankruptcy “exemptions” is then subtracted from this “unencumbered equity”. If the amount left is less than the amount that it would take to pay off the home, you will be allowed to keep it. Unfortunately, if the amount is more, then the bankruptcy trustee will ask that the court include the house for liquidation. This means that the house will be sold, and any proceeds from the house sale will be given to your creditors to pay your outstanding debt to them. One thing to keep in mind is that each state differs in the exemptions that it allows home owners, and some states have a “homestead” provision that also provides some protection in the case of bankruptcy.
If you are considering this difficult step, good, solid legal advice is critical. Contact the Business Name, a Bankruptcy attorney in Wichita, at website domain for assistance. You need good counsel, and they can provide it.
