Filing for bankruptcy is a way for people who have huge amounts of debt to get out of debt completely or at least be relieved of some of their debt. You need to understand however, that filing for bankruptcy will stay on your credit history for ten years. Bankruptcy is federal business which means that its laws are basically the same in every state in the country with a few exemptions here and there. Meaning, if federal bankruptcy laws are different from your home state laws, federal laws will prevail when you are filing for bankruptcy. But would filing for bankruptcy make you lose your home? A careful study of bankruptcy laws is needed so you can answer this question.
If there is no more equity on the home, the trustee of the Chapter 7 bankruptcy filing would abandon the house to you; the equity of the hose is computed by taking note of the current value of the home and subtracting from that amount the cost of the sale as well as pay off any balances on existing liens on the house. When the house is “abandoned” to you, you are able to continue living in your home and keep the house so long as you can make your monthly mortgage payments. You need to understand however, that filing for bankruptcy does not lift off any liens or mortgages on the house and you still need to pay them off. You need to keep in mind that lenders would still have the right to foreclose on the property if you fail to make monthly payments as you have agreed. Keep a few things in mind before filing for Chapter 7 bankruptcy.
Taking the time to find out if there is sufficient equity on your home is the first thing you need to do if you are concerned about losing your house when you file for Chapter 7 bankruptcy. You need to do this so you can decide if the exemptions available to you would equal or exceed the equity left on the property. If the exemptions are found to equal or exceed the equity, you are going to be allowed to keep your house so long as you continue to pay the mortgage on the house as well as any other liens existing on the property. And to make sure that you are going to avoid foreclosure on your home, you need to be able to afford the monthly mortgage and existing lien payments on the property.