Is my house protected in a Chapter 7 Bankruptcy?

Is my house protected in a Chapter 7 Bankruptcy?

People often ask me, “Will I lose my house if I file Chapter 7 Bankruptcy?”

First, you must be current on your mortgage payments when your Bankruptcy case is filed.  And, you must remain current during your case.  If you are delinquent when the case is filed, then the mortgage company may ask the Court for permission to proceed with its state law remedies such as foreclosure.  And you could have the same result if you become delinquent during the case.

Second, your mortgage company may request that you sign a reaffirmation agreement.  Such an agreement makes you personally liable for mortgage payments after the case is over.  Absent the agreement your personal liability on the mortgage loan is discharged by the Bankruptcy.

Third, any equity in your home must be exempted so the Chapter 7 Trustee
does not sell the home to pay your unsecured creditors.  Your home may be protected in a couple ways.

You may exempt the home equity by claiming the homestead exemption. The Florida homestead exemption is unlimited subject to a couple conditions.   A home located in a municipality may not be larger the ½ of an acre.  A home located outside a municipality may not be larger than 160 acres.  And, you acquired your home more than 1215 days before your Bankruptcy case.

You also may exempt the home as Tenancy by the Entirety property.  You must be married.  The home was acquired during the marriage.  Both you and spouse acquired an interest in the home by the same deed.  The home is deeded to you and your spouse as “husband and wife.” Lastly, you and your spouse have no joint unsecured debts.

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