If you’re struggling to pay off your debts in Colorado, you might have thought about filing for bankruptcy. However, you might have hesitated after hearing stories about people being forced to sell their homes to pay off their debts. Will you lose your house if you file for bankruptcy, or will you be able to keep your house even if you’re still paying off the mortgage?
What happens to your house when you file for bankruptcy?
Whether or not you keep your house depends on your financial situation and the type of bankruptcy that you decide to pursue. If you file for Chapter 7 bankruptcy, you’ll be able to discharge most of your debts. However, you might have to sell off some of your properties in the process. You might qualify for an exemption, but Chapter 7 exemptions come with strict requirements.
On the other hand, filing for Chapter 13 bankruptcy gives you a better chance of keeping your house. According to bankruptcy law, Chapter 13 bankruptcy offers more exemptions for houses like properties and vehicles. You’ll be focused on coming up with a repayment plan that allows you to pay off your debts rather than selling off properties to get your debts discharged.
If you’re not sure whether you can keep up the mortgage payments, selling your house during bankruptcy might be in your best interests. Otherwise, you’ll have to deal with the foreclosure process, which can drastically lower your credit score. Since your credit score already takes a hit when you file for bankruptcy, you might not want to take the chance.
Which form of bankruptcy is right for you?
If they qualify, some people prefer to discharge their debts and start over. Others prefer to figure out a payment plan that allows them to pay off their debts and keep most of their properties. Each type of bankruptcy has its own benefits and drawbacks. Talking to an attorney may help you figure out which type of bankruptcy is right for your situation. Once you’ve hired an attorney, you may get help and guidance throughout the process.
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