When your debt spirals out of control, you may begin searching for solutions as to how you can fix it. You may think about filing for bankruptcy as a potential means of getting your affairs back in order. You may, however, have concerns about whether filing for personal bankruptcy will result in you losing the place you call home. Unfortunately, there is no single, all-encompassing answer to this question.
There is some potentially good news, though – filing for bankruptcy does not automatically mean that you need to surrender your home and find a new place to live. Instead, whether you will ultimately have to give up your home depends on several different elements, including the type of bankruptcy proceeding you utilize.
Chapter 7 bankruptcies
If you move forward with a Chapter 7 bankruptcy, there is potential for you to lose your home, but it all depends on how much equity you have in it and whether you are current on your mortgage payments. Tennessee has a certain exemption amount that it allows when residents file for bankruptcy. If the amount of equity you have in your home is lower than this exemption amount, you may be able to hang on to it despite filing.
Chapter 13 bankruptcies
Chapter 13 bankruptcies differ from Chapter 7 bankruptcies. While Chapter 7 bankruptcies are essentially liquidations, Chapter 13 bankruptcies involve restructuring your debts so you can pay at least part of them back. As long as you stick to the terms of your repayment plan stay current on your mortgage payments, you should be able to keep your home with a Chapter 13 bankruptcy filing.
In some instances, such as if you owe more on your property than the home is actually worth, or if you would save money by renting a separate property, it may serve you well to let the home go during the bankruptcy process.