If a person files for bankrupcy can they still keep their home?

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If a person files for bankrupcy can they still keep their home?

Asked on June 9, 2012 under Bankruptcy Law, California

Answers:

Janet Martin / Janet Martin Attorney at Law

Answered 9 years ago | Contributor

Yes, there are a number of ways or methods someone can keep their home in a Chapter 7 liquidation. First if there is no equity and the loans are more than the value, the trustee will not have any reason to want the home, remember the trustee's job is to find assets with value to sell and recover funds to pay the unsecured creditors.

Second, various states allow a homeowners exemption of a certain amount of equity to be "untouchable" in a bankruptcy. In Calif, it is from $75,000 to $150,000 based on circumstances..,,so you can have equity up to that exemption amount over and above your liens and still the trustee wil not do anything with the house.

Third, if you have more than the exemption amount, it has to be enough to make it worth the tustee's time and effort to sell your home, in otherwords, after commission and other expenses there is still a nice amount of money, then the trustee would consider it for sale.

In a Chapter 13 (wage earner reorganization), you would be able to keep your house if you had more disposable income over a 3 year period to repay creditors on a plan, than the liqudation of your house  and other assets would yield in recoverable funds.

 

finally if you have a LOT of equity in your home, you are not going to want to file bk.


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