Can I Keep My House in Bankruptcy?

If I File For Bankruptcy, Can I Keep My House

Many people have one major asset and concern on their mind if they are considering filing a bankruptcy case” Will I be able to keep my house?  While there are a lot of variables in how this question is answered, generally, if you are not behind on your house payments and can keep making the payments during and after bankruptcy you can keep your house in a Chapter 7 or Chapter 13 bankruptcy case. Chapter 7 is commonly called a liquidation case and Chapter 13 involves a payment plan.

Washington State Homestead Exemption

In either type of case, you are entitled to certain exemptions, meaning property that cannot be taken from you.  In Washington you can exempt up to $125,000 worth of equity in your home.  This is your Homestead Exemption.  Equity is the difference between what you owe on your home and what it is worth. Many homeowners have very little equity because of financing 100% of the purchase price or having taken out a home equity line of credit.  Before the recession that occurred in 2008 it was possible to borrow up to the full value of a home.  Since 2008, property values dropped and have now started to rise.  For many however, their home loan leaves no room for non-exempt equity.

You Can Still Keep Your Home In A Chapter 13

If you are behind in your payments, you can still keep your home in a Chapter 13 if you can make the monthly payment and pay off the past due payments over 36 to 60 months.  Both the current and past due payments are paid to the Chapter 13 Trustee monthly along with any additional amounts dedicated to the Plan. For example, if your monthly payment is $1,000.00 and you missed six payments (total $6,000.00) then you would have to be able to pay $1,000.00 plus $166.67 ($6,000.00 divided by 36) per month.

What You Should Think About When It Comes To Filing Bankruptcy

Also because of the recession, many homeowners have fallen so far behind that they cannot handle these payments.  If that is the case, they will need to consider giving up their house.  If there is no equity in the house this decision may make practical sense because the payments are not building value in the house.  There are of course, also many practical and emotional reasons that make can make this decision difficult. Life plans, the well-being of children, disruption in quality of life are all affected when a family faces the loss of their home. The situation can however, be made more predictable if all possibilities are considered.  Instead of making a heroic effort to save a house that the family can no longer afford, it may be less disruptive to plan a move in a less hurried manner as part of a bankruptcy.

Protect Yourself & Your Home When Filing For Bankruptcy

An experienced bankruptcy attorney can evaluate your financial situation and all the factors that affect this decision. Protect Your property, paycheck & peace of mind. Call us today so you can sleep easy tonight. 509-822-5898.

can i keep my house if i file for bankruptcy

File For Bankruptcy In Spokane

Filing For Bankruptcy In Spokane

Filing for Bankruptcy in Spokane, Riverfront Park Spokane

When the Bankruptcy Code was changed in 2006 many people believed it became more difficult to file for bankruptcy or that they would have to pay all their debts in full.  I still hear these reasons when people tell me how long they have suffered with crushing debt. The 2006 amendments did not make it more difficult to file for bankruptcy in Spokane or anywhere in Washington state for that matter.

Post 2006 Bankruptcy

After the changes in 2006, your income is compared to a state wide average, a process known as Means Testing.  If your income is below the state wide average you are generally still eligible to file for Chapter 7 which cancels most unsecured debts. 

State wide averaging includes the Seattle side of the state where incomes are higher. Most families in Spokane fall well below that state wide average. Today, the state wide average for a family of four in Washington is $84,786.00 per year.  If you make less than that amount, and your legitimate expenses exceed your income every month, you can still file for Chapter 7 bankruptcy and have most of your debts canceled.

What To Do

Protect yourself, your property and your paycheck and have some peace of mind. If you are in Spokane or close to Spokane, contact our office at 509.838.4458 or fill out our bankruptcy intake form on our website for a quick evaluation of your situation and let’s see if filing for bankruptcy is right for you or if there are other alternatives.