How Bankruptcy Works for the Average Homeowner

Liviakis Law Firm is a reputable legal institution with a track record of assisting homeowners to navigate through the complex process of bankruptcy. This article will elucidate how bankruptcy works for a debtor that is a homeowner.

Understanding Bankruptcy

Bankruptcy is a legal process that allows individuals or businesses struggling with debts to seek relief and regain their financial footing. It’s a system established to ensure creditors get as much as possible of what they’re owed, while still providing the debtor a path towards a fresh start.

Bankruptcy and Home Ownership

Homeowners facing financial difficulties often fear losing their homes in the bankruptcy process. However, bankruptcy laws provide protections for homeowners, which can help prevent the forced sale of a home to repay debts.

Chapter 7 Bankruptcy and Homeowners

Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, involves selling off the debtor’s non-exempt assets to repay creditors. However, many states have homestead exemptions that protect a certain amount of equity in a primary residence. If a homeowner’s equity in their home is less than the exemption amount, they can typically keep their home.

Chapter 13 Bankruptcy and Homeowners

Chapter 13 bankruptcy, also known as a “wage earner’s plan,” allows homeowners with regular income to develop a plan to repay all or part of their debts over three to five years. This type of bankruptcy can be particularly beneficial to homeowners facing foreclosure, as it can halt the foreclosure process and allow the homeowner to catch up on missed mortgage payments.

Seeking Legal Advice

Bankruptcy is a complex process, and the specifics can vary greatly depending on individual circumstances. Therefore, it’s crucial for homeowners considering bankruptcy to seek legal advice with a nearby bankruptcy lawyer. At Liviakis Law Firm, we are committed to helping our clients understand their options and make informed decisions. For more information or to schedule a consultation, please contact us at 916 459 2364.