Time and time again, when discussing bankruptcy, I am asked if they can protect their house when they file. This is an extremely important issue to those with homes that are contemplating filing for bankruptcy protection. So lets start with the wording of the question. “Can I protect my home?” Home should be changed to “equity”, as in “Can I protect my equity?” When a Chapter 7 bankruptcy is filed at court, the court appointed Trustee will review your assets. The goal here is that if a debtor owns too many assets, then the court will begin the process of liquidating that asset. The asset, in the case of a home, is not the actual home per se, but the equity in the home. This may sound scary, but in a vast majority of cases, these assets can be protected. Equity in property such as vehicles and homes, retirement accounts and even toys such as jet-skis, dirt bikes and trailers are possible to protect.
The bankruptcy court allows certain “exemptions” to property to protect the property from liquidation by the court. These exemptions can be confusing and you should discuss your particulars with an attorney. But in most cases, equity in a home can be protected.
As with any legal matter, it always best to discuss your case with an attorney. Particulars of a specific case change depending on many things and having an experienced attorney on your side would be very beneficial. You do not want to go to your bankruptcy hearing, and finding out, only then, that you are not actually entitled to a particular exemption and that the court is going to liquidate your property.
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