When filing for bankruptcy, many people want to be sure that they will be able to keep their home. Because what’s worse than filing for bankruptcy, having to find a new place to live and moving? That might be a little too much for one person to handle. So, what can you do? Well, there are many different options when it comes to bankruptcy and many times it’s very valuable to meet with a bankruptcy attorney to discuss what is best for your situation. However, we’ll review a few options, so you can know what to expect.
How To Keep Your Property When Filing For Bankruptcy
- In every bankruptcy case, you are allowed to keep a certain dollar value in property. For example, you can keep up to $20,000 in home furnishings, $5,000 in value for a motor vehicle and $22,000 in home equity. And usually most people that file for bankruptcy have property that is well within their exemptions and will not lose any of their property regardless of what chapter they file.
- However, if you do have a property that is non-exempt, filing for a chapter 13 might be the best decision. For example, if you have a home with $30,000 in equity and you file a chapter 7, you might have to sell your house. You would be paid the first $22,000 from the proceeds representing your objection, the trustee would take their fee, let’s say $2,000, and the remaining money, $6,000, would be used to repay your creditors. In a situation like this, it might be better to file a chapter 13. As long as you promise to repay your creditors at least $6,000 over the span of up to 5 years, you can keep your property because your creditors end up getting the same amount in a chapter 13 as they would in a chapter 7.
- Your decision will also depend on what state you live in. Certain states have exemption laws that may allow you to keep your property. For example, in Michigan a debtor can choose between two sets of exemption laws, federal exemptions and state exemptions. In other states, you may not have the choice and will only have one or the other. Determining what set of exemptions to use is best left to your attorney. In Michigan, if you have $56,000 of home equity, you may be able to protect all of it under the Michigan state exemptions, but not federal.
Deciding what route to take when filing for bankruptcy can be very overwhelming. Determining what chapter to file and what exemptions to use might make your head explode. And that’s why it’s always best to work with an experienced bankruptcy attorney. You want someone knowledgable on your side to explain your best options. Check out our post 5 Questions You Should Ask Your Bankruptcy Attorney to help you find the attorney that’s right for you.
At Mapes Law Offices, we help our clients determine the best course of action for their unique situation. Since 2008, we have been walking our clients through bankruptcy and onto financial success. All of our attorneys attend an average of 30 hours of continuing education every year. We know how important this is, as the laws are always changing. However, continuing education is not required by law, so many other firms don’t require their attorneys to do it. We want to be on top of our game to give our clients the best service possible.
If you are in the West Michigan area, and are looking for a bankruptcy attorney, give Mapes Law Offices a call at (616) 719-3847 or request your free consultation today. We work hard for you, because we know how difficult filing for bankruptcy can be.