Bankruptcy Fear #4
I will lose my house, car, assets or personal property.
Most people have a fear of filing personal bankruptcy through fear of losing a major asset,
Do not deny yourself the debt relief you deserve out of fear of losing your house or your car.
The truth is, the most common reason for people losing a house in a bankruptcy is because they simply wanted to, either because they just can’t afford the monthly mortgage anymore or because the home is worth less than what they paid for it.
If you have a house that is “under water”, meaning you owe more on the home than you can currently sell it for, then you would not lose it in bankruptcy, provided you keep making your monthly mortgage payments.
If you think your house has equity, your first option should be to talk to an attorney who can advise you whether the asset is at risk in a bankruptcy. With the closing costs involved in selling your home, along with your homestead exemption, the asset may not be worth seizing in a bankruptcy, which means you get to keep your house, so long as you make and can afford those monthly payments.
If you are behind on your house or car and file Chapter 7, you can use the bankruptcy as a chance to walk away from the debt and start over, which may be the best choice for someone who cannot afford to pay back such loans. Chapter 13 is also an option to save your house or your car if you are behind on payments.
If you have a house or a car on which you do not owe any money, you may be able to protect the property in Chapter 7 using exemptions. Exemptions are an area of bankruptcy law that can be confusing, so talking to an experienced bankruptcy attorney is the best way to find out if you can protect your house or your car in a Chapter 7.