Most people mistakenly believe that if they file for bankruptcy, they will lose their homes. While sometimes, it is possible to lose your home in bankruptcy, those cases are rare. Exempted assets are assets that are not seized and sold during bankruptcy to cover what you owe, according to FindLaw. There are ways to exempt your home from bankruptcy proceedings to protect it. What should you do to protect your home during bankruptcy? Here are some suggestions.
The Chapters Of Bankruptcy
There are two main chapters of bankruptcy that personal filers can choose. A Chapter 7 bankruptcy and a Chapter 13 bankruptcy. These both have the same goal to get rid of debt, but how it works is very different and will affect how you manage your home in the proceedings. Under a Chapter 7 bankruptcy, the process is much shorter than in Chapter 13. However, Chapter 7 is where protecting your home becomes a lot more important.
During a Chapter 7 bankruptcy they divide your assets among your creditors, although your home can be exempt from the process. Under Chapter 13, you get to keep all your assets but have to make monthly payments to all your creditors, often at a reduced rate.
Chapter 13 is often filed to save a home from foreclosure. In Chapter 7 you almost always get to keep your home but you do not have the long-term protection that you have in a Chapter 13 case as long as you make your payments. A lawyer can help you decide which plan is right for you.
Keep Up On Maintenance
It is essential that you keep up with the maintenance of your home while you are in bankruptcy. For example, furnace filters should be changed between every 30 and every 90 days, depending on household composition and amount of use. Keeping up with your home’s maintenance will help to keep additional repair costs down. Immediately following the bankruptcy, you cannot rely on credit to get household repairs done. You will be an all-cash customer for a while.
Keeping up with your home maintenance can extend the life of your household systems and help to curb repair costs while you get through bankruptcy. Other things you should do to protect your home during this time include having a roof inspection so that minor, less costly repairs can be made before the problem gets bigger. State Farm, the insurance giant, reports that a metal roof can last anywhere between 40-70 years, but even these durable roofs need attention from time to time.
Keep Really Good Records
Another way to protect your home during bankruptcy is to keep really excellent records of payments that you are making for your home, improvements that you are making, and a list of repairs that you are making. In some rare cases, banks (mortgage lenders) will send a representative to drive by the home, take pictures and report to the bankruptcy court if the home looks abandoned or not well-kept, or if they believe tenants are living in the home (which makes it a non-exempt property).
You always want to have proof that you in fact live in the home, paying bills and keeping up with the home. Hanging on to the receipts and other evidence is important. It is essential that you have proof on your side if ever a question arises.
Follow The Rules
One of the best ways to protect your home during bankruptcy is to follow the rules. If your lawyer advises you to do something, do it. If the court has ordered something, follow the court order. You can and should protect your home during your bankruptcy by doing everything that you are asked to do.
Working with an experienced lawyer will help you to best protect your home. Connect with a lawyer today that will provide you with the advice that you need.