If you’re struggling with debt and looking for a way out, you may turn to bankruptcy because it’s commonly referred to as an “easy” method of debt relief. While bankruptcy is intended for people who are struggling with their debts, it is not an easy way to get rid of debts. It can involve lenders reclaiming property to recoup their losses and hurts your credit for many years.
As a homeowner, you’re likely wondering, “Will I lose my house if I file for bankruptcy?” Depending on your debts and the type of bankruptcy you file for, it’s not uncommon for a lender to take a house in bankruptcy. In some cases, you can file for bankruptcy and keep your house, but it’s never guaranteed, and you could still be left with unmanageable debts.
Declaring bankruptcy shouldn’t always be your first option if you’re struggling with debts. Because bankruptcy can take your house, you could be left homeless with debts that you’re still expected to pay off. Joshua Denbeaux is an experienced New Jersey foreclosure who can help you explore alternative options to manage your debt. Contact us today to learn more about how we may be able to help you.
What Happens to My House if I Declare Bankruptcy?
There are ways that you can try to keep your house protected in bankruptcy. However, there is no way to definitively know that you’ll be able to file for bankruptcy without losing your house. In most cases, the extent of your losses will be determined after you file.
It’s important to know that there are no bankruptcy options that will forgive a primary mortgage. Regardless of the type of bankruptcy, you will still have to pay your mortgage if you keep your house.
With a chapter 13 bankruptcy, there is a possibility that you might not lose your house even if you are already behind on your payments. This is the type of bankruptcy that is frequently mentioned as a way to stop or avoid foreclosure. There is no guarantee that you can file for bankruptcy without losing your home. Every bankruptcy debt ruling varies based on the personal circumstances.
With this type of bankruptcy, lenders may reclaim assets, and your other debts will be pooled and prioritized into a new debt payment plan. These payment plans are pretty strict, and if you are late on any payments to any lenders, all of your assets could be taken.
Chapter 7 bankruptcy is promoted as a debt elimination program intended to help you get rid of unsecured debts. This usually means that lenders will take the assets you’re unable to pay for. If you have equity in your home that could be used to pay off other debts, or if you are behind on your mortgage payments, you could lose your home to pay off your debts as much as possible before eliminating them.
How to File for Bankruptcy Without Losing Everything
After working with thousands of New Jersey homeowners to help them avoid foreclosure, we believe bankruptcy is the last resort when dealing with debts because of the lasting negative impact it can have on your credit and that it can leave you without a place to live.
If you’re struggling with debt, specifically if a mortgage is involved, talking to your lender can be helpful. In a lot of cases, lenders may be willing to work with you to modify your payments so that you are in a better position to pay off your debts. An experienced attorney can help you through the process of negotiating with your lenders to try to avoid bankruptcy.
There are some personal circumstances that may make it more likely for you to keep your home if you file for bankruptcy. Bankruptcy is more commonly used as a way to discharge debts entirely, and using exemptions for your home doesn’t always work the way you’d like it to. Relying on exemption bankruptcy strategies as a way to keep your home can be risky, especially when there may be better alternatives.
Even if you do have to file for bankruptcy because of other overwhelming debts, there may be other ways to keep your home safe. For example, if you negotiate a loan modification for your mortgage with your lender before filing for bankruptcy, it may help you avoid losing your home in bankruptcy.
Every situation is different, and how to file for bankruptcy without losing everything can be a complicated process. There are other alternatives you should explore to understand all of your options before making permanent, long-lasting decisions like bankruptcy.
Talk to a Foreclosure Attorney Today
It’s important to remember that no matter how your debts are distributed, if you file for bankruptcy, your home could be at risk. Filing for bankruptcy is a major decision that can impact your finances and your credit score for many years. Before filing for bankruptcy, you should make sure that you’ve thought through all of your options and the possible outcomes.
An attorney may have experience or knowledge of options you’re unaware of that can help you keep your home and avoid bankruptcy. Contact Denbeaux & Denbeaux Law today to discuss your options.