Will I Lose My House if I File for Bankruptcy?
April 16, 2021
Are you a Homeowner overwhelmed with debts but afraid of what will happen if you file Bankruptcy?
This is a reasonable concern.
In Illinois, 48,673 people filed for Bankruptcy in 2019.* Chapter 7-30,695: to get a discharge of debts and get a “Fresh Start.” Chapter 13-17,816 to manage their debts.
ROBERT J. ADAMS & ASSOCIATES is here to help. We know the law as applied to Homeowners.
ROBERT J. ADAMS & ASSOCIATES serves clients throughout Chicago land. That includes Waukegan and all surrounding suburbs and counties. Call us today at (312) 872-8443 to discuss your individual situation.
Chapter 7 for Homeowners
We have many homeowners who file Chapter 7 and keep their house.
The purpose of Chapter 7 is to get rid of all or most debt. You get a financial "clean slate.
Can you as, a Homeowner, file Chapter 7 and keep your home? The test is to determine the equity in your home.
What is Equity? It is a math problem. Start with the market value of your home. Then subtract the mortgage balance and some other deductions. What is leftover if you had a hypothetical sale of your home?
Then you see if it falls within the allowed Illinois Homestead exemptions.
What are exemptions? Stuff you can keep if you file for Chapter 7.
In Illinois, the Homestead exemption for a single person is $15,000. It is $30,000 for a married couple.
You start with a hypothetical sale. What are the net proceeds? Then subtract your exemption. If the result is zero, then you are likely eligible to file Chapter 7.
For a more complete explanation of the homeowner exemption, check out our blog on Homestead Exemptions
Chapter 13 for Homeowners
Chapter 13 is a court-administered plan to consolidate and pay your debts over time. Repayment plans last 3 to 5 years.
There are reasons why a homeowner may not file Chapter 7. Sometimes you have too much equity in your home to file Chapter 7. Some homeowners file Chapter 13 because Chapter 7 does fit their needs.
When you file Chapter 13, you keep your property like your house and your car.
All or the majority of your debt are discharged when you complete your Chapter 13 bankruptcy. Your home is protected from foreclosure as long as you stay up to date with your monthly payments.
The lawyers at ROBERT J. ADAMS & ASSOCIATES will go over your options. You choose what is best for you.
Remember, our consultation is free. So call us at (312) 872-8443. You have nothing to lose and a lot to gain.*Statistic provided by a report from the American Bankruptcy Institute