This is probably one of the most asked questions we get by clients thinking on filing Bankruptcy.The answer to the question depends on several variables, such as do you have equity in the house, are you behind in payments, can you qualify for a Chapter 13 repayment plan … etc…
If you a Chapter 7 case you would look at two main issues being, do you have equity in the property and are you current on the loan payment. In Tennessee you can have equity (meaning value above the loan) from as little as $ 5,000 up to $ 50,000, depending on your marital status, your age, whether you have minor children that live with you and is the case a joint or single filing. Generally, you also need to be current on the loan or filing Chapter 7 will not help you keep the house if the mortgage company wishes to foreclose. The filing of a Chapter 7 could cause the mortgage company to have to file a request for relief to foreclose in this example, but the Court would freely grant the Motion unless the Chapter 7 Trustee was interested in the house. So, if you are behind on your mortgage, even though you do not have any equity above what is allowed under your Tennessee exemptions discussed above, Chapter 7 is not a very good idea if you wish to keep the house and any benefit of filing the Chapter 7 as to the mortgage would be very short lived.
A better course of action if you are behind on your mortgage or if you do have too much equity for Chapter 7, would be to file a Chapter 13 bankruptcy wish would allow you to put together a repayment plan which means, in most cases, you get to keep the house. This can be rather complicated as you could be both behind on your mortgage and have equity in the property, so the math involved in putting together the Chapter 13 Plan can be complex. The important thing is that if you can afford to keep the house, meaning you have a source of income to allow you to make the Chapter 13 Plan payments that would be necessary under your particular case, you can most likely keep your house and avoid foreclosure.
If you have questions about keeping your house and filing Bankruptcy, please call us at any time and we would be happy to look into your specific situation and see if Bankruptcy might help you.