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The Safety of Your Home During a Bankruptcy

Posted on in Bankruptcy Attorney

If you have been surprised by unexpected medical bills or lost your job, then you might be in a financial predicament. When you get behind on your bills, creditors will aggressively call for you to pay what you owe. Sometimes, banks and other lenders will threaten to foreclose on your home or garnish your wages. But if saving your home is important to you, it is important to know how filing for bankruptcy may save your house.

When you file for bankruptcy, an automatic stay order will suspend all collection activity. This will allow you the necessary time to become current on your mortgage or other bills if possible. During that time your home cannot be lost due a foreclosure.

That is unless your creditors can prove certain things to the bankruptcy court that will allow the automatic stay to be lifted. Examples of possible reasons why the stay can be terminated are if you cannot pay for the missed payments, if you have no equity in the home, or if there is no other foreseeable way that you could keep the property in the future. If these or other reasons can be proven, your house may proceed through the foreclosure process.

This is not the only possible way to lose your home. It also depends on the Chapter you file. A Chapter 7 bankruptcy is also called a liquidation bankruptcy. Your personal assets will be collected by a trustee whose main job is to sell these items in order to make payments on overdue bills. Depending on what is covered by homestead exceptions, this may include your home. A Chapter 13 bankruptcy will provide an easier way to keep your home because it reorganizes your debts and allows you to keep more of your assets because you will pay for more of your debts.

Obviously the decision to file for bankruptcy is large and the effects are far-reaching. But if could save your home from foreclosure and allow you to get back on your feet, it may be your best option. Contact an experienced bankruptcy attorney in Cook County to find out more information about whether bankruptcy is right for you.

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