Countless people throughout the country come to the same realization every day: They have too much debt to realistically repay in their current situation. This moment of truth is often scary and overwhelming, but it is also a step towards the financial freedom you seek. You may be considering bankruptcy, and if so, you likely worry about whether you will be able to keep your home.
According to the Memphis Daily News, Tennessee leads the nation in bankruptcies with filings amounting to more than twice the national average. If you are considering bankruptcy, the following factors may impact your ability to retain your home.
One of the biggest benefits of filing for bankruptcy is the automatic stay it grants debtors. This essentially means that once you receive approval to officially file your bankruptcy, your creditors cannot take any further action to collect from you. If your home had been a target of creditors' collection attempts, this will pause the process and allow you to make a new plan.
Pay off arrearage
If your home is in foreclosure or you are approaching foreclosure with late payments, getting caught up might seem like an insurmountable task. Under Chapter 13 bankruptcy, however, you can make payments towards the arrearage of your mortgage through a repayment plan that your lender approves and you submit to a court. If approved, this can make retaining your home and repaying your mortgage debt a possibility.
Consider your equity
Another important consideration for homeowners researching bankruptcy is how much equity the house is worth. Though bankruptcy could help you save your home, general procedure can allow creditors to potentially claim and liquidate assets. Some home equity, however, is exempt from this, and certain repayment plans can even preserve that equity. It is best to consult with an attorney to see if you can claim such an exemption.