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How to Keep Your Home If You File Chapter 7 Bankruptcy in Florida

Posted on in Bankruptcy

Sunrise bankruptcy attorney

While it is true that bankruptcy may not be for everyone, the two types of consumer bankruptcy do allow for plenty of options within them. People who cannot afford a payment plan for a Chapter 13 bankruptcy are usually afraid to file a Chapter 7 bankruptcy because they worry that foreclosure might result if they own a house. However, depending on your circumstances, you might be able to get the clean slate of a Chapter 7 bankruptcy without losing your home to foreclosure. In Florida, it is possible to keep your house even if you file for a Chapter 7 discharge of all consumer debts. 

Chapter 7 Versus Chapter 13: Keeping Your House

Most bankruptcy attorneys will advise you to file for Chapter 13 bankruptcy if you meet the following criteria:

  • You are a wage-earner, meaning you bring in enough income to afford to make a payment toward a Chapter 13 payment plan every month.

  • You would like to keep your non-exempt property, including your house, your car, and any other valuables.

  • You have already missed several mortgage payments and would like to figure out a reasonable way to catch up on those payments to bring your mortgage account current without falling behind again.

This is because a Chapter 13 bankruptcy is characterized by a repayment plan that essentially does require you to pay back at least some of your debts in total before having the remainder discharged over the course of 3-5 years. In that sense, if you want to keep your home, Chapter 13 seems like the obvious choice. 

But what should you do if you do not make enough money to contribute to a Chapter 13 repayment schedule? Then a Chapter 7 bankruptcy might be your next best option. Normally, Chapter 7 requires you to liquidate your assets and property in order to pay your debts and have them discharged completely. Despite this, there are some exemptions and other rules and requirements that can allow you to maintain certain property and assets in your possession, including clothes, other property necessary for your daily life, and even a portion of the equity in your house (known as the Homestead Exemption) and your vehicles. 

How to Keep Your House in a Florida Chapter 7 Bankruptcy

  1. Meet the requirements. In Florida, this means you have to meet the requirements for being able to keep your house despite filing a Chapter 7 bankruptcy. In most cases, this means you have enough equity in your home that is equal to or less than the Homestead Exemption amount, which is typically $125,000 (or close to it). In some cases, if your debts are so high that selling your home to use the funds from the sale to pay off the mortgage and then pay off your creditors would not net enough liquid assets, then you might be able to have more equity in your home than the exemption allows for.

  2. Keep making mortgage payments and HOA payments. The moment you are no longer current on those important housing payments, you will no longer qualify for a Chapter 7 bankruptcy if you wish to keep your home.

  3. Hire a bankruptcy attorney. Do not stress about these serious financial concerns; hire a bankruptcy attorney who knows how to handle these cases so that you can focus on living your life.

Contact a Ft. Lauderdale, FL Chapter 7 Bankruptcy Attorney

If you are on the brink of bankruptcy, foreclosure, or both, it might be difficult for you to even think about taking action; however, despite the tendency to procrastinate or avoid the problems at hand, you need to do something about your financial situation immediately. That is when a knowledgeable Broward County bankruptcy lawyer can help you. With the experience necessary to guide you toward a positive resolution in your bankruptcy case, the talented team at Elliot Legal Group, P.A., can help you get out of debt and still keep your house. Call us today at 754-332-2101 to schedule a confidential consultation. 

 

Sources:

https://www.floridabar.org/public/consumer/pamphlet008/

https://www.bankrate.com/personal-finance/debt/what-can-creditors-take-in-a-bankruptcy/

https://www.tampabay.com/news/business/2020/09/28/fear-of-bankruptcy-holds-too-many-people-back/

 

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