What Happens to My Home in Bankruptcy?
When filing bankruptcy in Washington State, debtors should consult an experienced bankruptcy lawyer to help assess their situation as to what will happen to their home in a bankruptcy. Washington State law allows debtors to choose either Federal or State bankruptcy exemptions to apply to their case. Bankruptcy exemptions are the rules that allow you to keep your things. The state exemptions allow for debtors to protect up to $125,000 of equity in their home, while the federal exemption can protect considerably less, but allow for greater exemptions on other property. Before filing bankruptcy a debtor should consider all of their options with regards to keeping their home so long as they are not over the allowable equity limit. Here are the options available to debtors:
(1) Keep the house and continues making payments, just as before.
(2) Surrender the house, and generally can live there payment free until there is a foreclosure.
(3) Seek modification of one or more of the loans secured by the property.
(4) Sell the property for its current value with the cooperation of the secured creditors.
Therefore if you are attached to your home and do not want to give it up after filing bankruptcy, you may not have to. On the other hand, if you home is under water with negative equity, then you may want to walk away from the home, let it foreclose, and start fresh as you most likely will not be liable for any debt after the foreclosure. A short sale may be an option where the lender accepts less for the property that what is owed, thus avoiding foreclosure and buying more time to live in the property rent free. As you can see there are different options available for different needs.
As you can see, if you are considering filing bankruptcy, you should consider speaking to a bankruptcy lawyer, prior to taking action. If you have additional questions please schedule a free consultation with Symmes Law Group by calling 206-682-7975