Bankruptcy is a scary word for many people, but it may be the ideal financial solution for some. Understanding the process can take a lot of the fear and uncertainty away. Many people assume that they lose everything if they claim bankruptcy. While you can certainly be required to forfeit assets in some cases, it’s not as common as you think. In fact, many people go on to continue paying their mortgage or rent even through the bankruptcy process.
Bankrupt Doesn’t Mean “Broke”
Too often, people assume that to file bankruptcy, they have to be destitute and that if they aren’t, they won’t qualify. However, today’s bankruptcy laws are designed to help people who are in serious financial trouble and need another way out. You might not be completely broke. You could own a home, have a car loan, and even live a relatively comfortable life. However, if your debts have gotten out of control, you may still find this a viable solution.
The first thing that you have to do is erase all of your preconceived notions about bankruptcy and how it works. You do not automatically put your home at risk if you choose to file. In some cases, it may come up in the discussion of assets, but it’s not going to just be ripped out from under you as you might see in a movie. There’s a process and there are limits to what can be taken, including the fact that the courts can’t just leave all these people homeless because their bills got out of control.
What Happens to My Mortgage?
If you have a mortgage and you file for bankruptcy, you can choose to have that excluded from the filing. This may not always be possible, but if you talk to your attorney, you may realize it’s a more viable solution than you thought. You should also call your mortgage company and discuss any past due payments or issues with them first so that they know you are trying to take a responsible approach and get your finances under control.
Your home may be taken as an asset, or put at risk, if you are too far behind on the mortgage when you file or if you have a ton of equity in your home that could be used to pay off the debts. Every case will be different, but some states allow people to exempt the equity of their home from the filing, too.
You do have to keep paying your mortgage throughout the bankruptcy process. You’re not going to be able to keep your home if you aren’t making the payments. Once the rest of your debts are out of the way, it should be easier for you to be able to afford the monthly mortgage payment. The best thing that you can do is to discuss your specific circumstances with a bankruptcy lawyer so that you can get the answers you need to make the best decision for your situation.
The Final Call
Bankruptcy isn’t usually what people think, including the fact that losing your house in the process is a lot rarer than many people expect. There are a lot of ways to ensure that your home is safe from garnishment or repossession when you are going through the process of bankruptcy, but it’s all best done with a dedicated lawyer on your side. Don’t put off filing for bankruptcy just because you think you’ll lose your home. Unless your mortgage is severely behind, you’ll generally have the option to keep your home, so talk to someone today.
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Las Vegas, Nevada 89123