Can You Keep Your Home After Filing Bankruptcy in Pennsylvania?
Filing for bankruptcy can be a daunting and confusing process, especially when it comes to understanding how it affects your home. If you’re residing in Pennsylvania and are considering bankruptcy as a solution for your financial troubles, you may be wondering, “Can I keep my home after filing for bankruptcy?” The answer largely depends on several factors, including the type of bankruptcy you file and the equity in your home.
In Pennsylvania, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy. Each chapter has different implications for asset retention, especially when it comes to real estate.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is known as "liquidation bankruptcy." It allows individuals to eliminate most unsecured debts but may require the sale of non-exempt assets to pay creditors. The good news is that Pennsylvania has specific homestead exemption laws that can protect your home from being sold in bankruptcy. Under the Pennsylvania homestead exemption, homeowners can protect up to $25,150 of equity in their primary residence.
If your home’s equity is below this threshold, you will typically be able to keep your home. However, if your equity exceeds this amount, you may face the risk of losing your home, as the bankruptcy trustee may sell it to satisfy creditors. Working with a skilled bankruptcy attorney can help you assess your situation and determine the best course of action to protect your home.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as a “restructuring bankruptcy,” allows individuals to keep their assets while repaying their debts over a three to five-year period. This type of bankruptcy is advantageous for those who have fallen behind on mortgage payments but still want to retain their home.
In Chapter 13, you create a repayment plan that enables you to catch up on missed mortgage payments while keeping your home. As long as you adhere to the repayment plan and make your mortgage payments on time, you can keep your home, regardless of your equity situation. This makes Chapter 13 a favorable option for many Pennsylvania homeowners struggling to make ends meet.
Considerations for Keeping Your Home
While bankruptcy can offer a fresh financial start, it’s essential to consider other factors that may impact your ability to keep your home:
- Mortgage Status: If your mortgage is current and you haven't missed payments, you are more likely to keep your home during bankruptcy. However, if you’re behind on payments, filing for Chapter 13 may be your best option to avoid foreclosure.
- Equity in Your Home: As previously mentioned, the amount of equity you have will determine if your home is exempt. Be sure to assess your home’s current market value against any existing debts.
- Advice from Professionals: Consulting with a bankruptcy lawyer can provide you with personalized advice based on your circumstances and help you navigate the complexities of bankruptcy law in Pennsylvania.
Conclusion
A bankruptcy filing does not automatically mean you will lose your home. In Pennsylvania, whether you can keep your home depends on the type of bankruptcy you file, the equity in your home, and your overall financial situation. By understanding your options and seeking professional guidance, you can make informed decisions that pave the way for a fresh start while protecting your most valuable asset—your home.