Bankruptcy and Real Estate in Howell
Safeguarding Your Home
Many are intimidated by the idea of filing for bankruptcy because they believe there is a large possibility that they will lose their home. This is a pervasive and dangerous misconception: More often than not, a person filing for bankruptcy will not lose their home, especially if they are guided by an experienced bankruptcy attorney.
A misplaced fear of losing your home to the bankruptcy process should not prevent you from filing. Our team at Fedoroff Firm, LLC can help you understand the relationship between bankruptcy and real estate in Howell. We are intimately familiar with the ins and outs of the bankruptcy process and have helped hundreds of clients successfully navigate their cases. Together, we can build a bankruptcy strategy that will give you much-needed debt relief while safeguarding your home from foreclosure and other creditor actions.
How Equity Factors Into Chapter 7 Bankruptcy and Real Estate
When you file for either type of consumer bankruptcy, a Trustee is appointed in the case, and it is his/her job to look out for the interests of the body of creditors. A trustee will be appointed to manage your estate throughout the process.
Chapter 7 bankruptcy involves a liquidation process, where nonexempt assets are sold by the trustee to generate funds to repay creditors. You might be concerned that your home could be liquidated, but the key word here is “nonexempt.” You have the ability to exempt a certain amount of equity using the federal exemption schedule for Chapter 7 bankruptcies. This homestead exemption can be used to protect your home from liquidation while still benefiting from the benefits of filing.
Furthermore, if you have no equity in your property (meaning that after the balance of the mortgages and other liens are deducted from the value of your property, there is little to no value left), the trustee in your bankruptcy case will take no action against your property. When there is little to no equity in a home, the trustee will “abandon” their interest in the property. That means that the trustee has determined that the sale of your property would not benefit your creditors. As a result, they will not sell the property.
The Chapter 13 Bankruptcy Process
If your property has enough equity to cause a problem in liquidation, you can instead explore filing a Chapter 13 bankruptcy case. Unlike Chapter 7 bankruptcy, Chapter 13 does not involve any liquidation process and instead focuses on reorganization.
As part of your debt reorganization, you can propose a plan to repay your mortgage lender any arrears that might have accrued on your account. You can also propose that you be permitted to retain your real estate on a temporary basis with the intent to sell that property after a specific window of time. The specifics of your proposal will depend on your individual circumstances and your ultimate goal for the involved property or properties.
How Bankruptcy’s Automatic Stay Protects Real Estate
Whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will benefit from the automatic stay. This automatic stay is effective immediately upon filing your bankruptcy petition.
The automatic stay protects your real estate property from collection actions. Any ongoing actions must be temporarily discontinued (with some limited exceptions). This freeze on legal action against your property can give you the time that you need to carefully review your options without the pressure and stress of aggressive creditor activity.
It is important to understand the power of the automatic stay. Creditors will not be able to place liens on your property or initiate foreclosures. Sometimes a bankruptcy case is utilized solely for the purpose of saving real estate, whether it be a primary residence or multiple pieces of investment property. Because the automatic stay endures until your bankruptcy filing has concluded, you can gain up to 5 years of valuable time when filing a Chapter 13 bankruptcy case.
Use Bankruptcy To Protect Your Home with Our Help
Our team at Fedoroff Firm, LLC understands the trepidation you may have in exploring bankruptcy, especially when there are so many myths suggesting you will lose your home after filing. We can work with you to identify how bankruptcy can give you the tools to overcome overwhelming debt without imperiling your home or other pieces of real estate. Our attorney has over 20 years of experience and can give you the experienced guidance you need to find the right financial solution.
“Highly qualified, professional, personable, and a real pleasure and privilege to work alongside.”- DT
“She makes sure you thoroughly understand all of your options and puts you at ease.”- Leean P.
“They made an extremely stressful situation seem a lot easier than expected.”- Sandra K.