Bankruptcy Might Not Save Your Home

When it comes to bankruptcy, owning a home can be a different thing for you. As a homeowner, which chapter of bankruptcy you are filing in Pennsylvania can make all the difference for you. In case as the homeowner, you choose the wrong chapter, you will get a disadvantageous filing. You won’t be able to exempt equity for your home. Or you might end up losing your home and all your belongings and on the street. We, at Pittsburgh Bankruptcy Law Group, believe that this is certainly not what you deserve from expunging unreasonable debts. Our Pittsburgh bankruptcy lawyer can explain the regulation for bankruptcy in the state of Pennsylvania and help you get through the process.

Homestead Exemption in Bankruptcy

When you are filing Chapter 7 bankruptcy liquidation, you need to use homestead exemption that will allow you to protect the equity in your primary residence from getting auctioned publicly. However, in Pennsylvania, you don’t get such an exemption. For availing of this, you need to apply while using federal exemption limits. Under the guidelines for federal bankruptcy law, you will be exempted to $22,975 for home equity from auction by a trustee appointed by the court. However, this is not as valuable as your particular lavish property can be worthy of.

But when you are filing using the federal exemption, there is no need for additional paperwork for homestead exemption. The court will be considering it as automatic protection. You need to remember that the exemption is applied to equity available in the property which is the fair market value minus the outstanding loan amount. If you owe more, you will have less to exempt. Our Pittsburgh bankruptcy lawyer can explain this to you further.

The Bankruptcy Math

Let’s assume that the fair market value of your property is $200,000. And you owe the loan of $100,000. The equity of your home will become $100,000 as the amount you owe will be subtracted from the fair value of your property. Now, in Pennsylvania, with the federal homestead exemption you get, you can shield your property only with $23,000 from being auctioned. As you don’t get to protect the property fully, the court-appointed trustee can seize it and auction it to pay off the debts. Though this whole process is very unfortunate, it is the only way to come out after bankruptcy with a better financial situation.

Chapter 13 Bankruptcy and Repayment

Chapter 13 of bankruptcy or negotiating a repayment under bankruptcy restricting can be a factor in the homestead exemption. The court will be considering the equity amount you can protect with the exemption while it can determine feasible payments for the unsecured creditors. The property possession you get can be used for restructuring your debt. In case you default your court-approved repayment plan, the debtors might come after the available equity for your default.

To prevent the creditor conduct repression action and to retain your property, you need to ensure that you are making the repayments on time.

If you are going through such a difficult process and want to get some home, you should come to us at Pittsburgh Bankruptcy Law Group. Our Pittsburgh bankruptcy lawyer will guide you through the process with their expert consultation.

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