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Debtors looking for liquidation and a fresh start always file for a Chapter 7 bankruptcy. With a headlong fall in the economy, bankruptcy is becoming more popular as a way to recover financially. The most common question that troubles the bankruptcy filers is whether they will lose their house in bankruptcy or not. However, the main determining factor of it is equity.
Equity is the main factor that determines whether you can keep your home or not. So, if you have equity on your home which cannot be covered by exemption, your bankruptcy trustee might decide to sell your home to repay your creditors. However, if your equity amount will not cover the costs of selling your home or if it will be covered by exemption, you might be allowed to keep the house. This does not mean you will get a free home. This means you will be allowed to stay in the house as long as you will make your mortgage payments.
You must be wondering that why should you file for bankruptcy if you might still lose your house. The answer is that losing your house is situational. You will be allowed to keep your house, if you will keep up with your payments even after filing for bankruptcy. But if you fail to keep up with your payments again, the bank can rightfully have a foreclosure on your home. However, you won’t be responsible for any kind of lack between the amount owned and the selling, the way you were before the bankruptcy. When you file for a bankruptcy, your personal liabilities get separated from the mortgage. This means you will be liable for the house only till the time you will pay for it. If you will stop making the payments, the bank can only take the house away and nothing else. Moreover, these payments will not harm or benefit your credit as they will not be reported to the credit bureau.
Filing for bankruptcy can be overwhelming so it is always better to consult a bankruptcy attorney before making any decision. You can contact the best bankruptcy attorneys of Los Angeles & Dallas, TX, at Recovery Law Group or by calling on 888-297-6203.