For most people, the allure of filing bankruptcy is that it not only halts your creditor's attempts to collect from you but also gives you a path to protecting your assets. And for most people, there is no more important asset than a home. The good news is that with the help of an experienced Nevada bankruptcy attorney, you will have options available to you to protect your home regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy. While there are strategies to protect your home in both types of bankruptcy, the methods vary. To get a better understanding of how a Nevada bankruptcy filing can affect the equity in your home, contact the experienced attorneys at Vohwinkel Law today.
Keeping Your Home in a Chapter 7 Bankruptcy
A Chapter 7 bankruptcy, also known as a “liquidation” bankruptcy, gives you the opportunity to eliminate most of your outstanding debt. These bankruptcies are much shorter than Chapter 13 filings and typically result in paying a much smaller percentage of your bills before your debts are discharged. However, the bankruptcy trustee can collect and sell some of your assets in order to satisfy as many of your creditors as possible. In some cases, that can involve selling your home.
Thankfully, the vast majority of homeowners are not at risk of losing their home in Chapter 7. When considering whether or not to sell your home, the trustee considers the equity you have in your home instead of its market value. If you owe as much or more on your mortgage note as the home is worth, you will have little to no equity in your home. Since the proceeds would be used up paying off your mortgage, it would not make sense for the trustee to liquidate your home.
There are also protections in place even if you have paid off a significant portion of your home loan. Every person filing for bankruptcy protection under Nevada law can take advantage of what is known as the homestead exemption. A homestead exemption can be used to exempt the equity in your primary residence. Exempt property cannot be sold by the trustee in order to satisfy your creditors, which means as long as the equity in your home is less than the Nevada homestead exemption, your home cannot be sold in a Chapter 7 proceeding. In Nevada, the homestead exemption is $550,000.
Keeping Your Home in a Chapter 13 Bankruptcy
Unlike a Chapter 7 bankruptcy, a Chapter 13 bankruptcy involves a multi-year plan to pay off your creditors and maintain your assets. As long as you are financially able to meet your mortgage payments and other responsibilities, you are not at risk of having your home sold out from under you in a Chapter 13 bankruptcy. However, it is important to understand that your bankruptcy plan must not only provide for your ongoing mortgage payments but also clear up your missed payments by the time your bankruptcy discharges.
In many cases, it becomes clear in bankruptcy that maintaining mortgage payments on a home is simply not feasible for some filers. The decision to keep making mortgage payments or not is a serious one and is best made with the counsel of an experienced bankruptcy attorney. In some cases, your attorney may be able to negotiate with your mortgage lender to lower the interest rate or to restructure the loan with more favorable terms.
How an Experienced Las Vegas Bankruptcy Attorney can Help
No matter what type of bankruptcy you are considering, there are steps that you can take to keep your home. The most important of these steps, however, is to contact an experienced bankruptcy attorney with your questions right away. If you are considering bankruptcy in Nevada, the experienced bankruptcy attorneys at Vohwinkel Law can help you understand your options. Contact Vohwinkel Law today to schedule a free consultation.