Bankruptcy & Can I Keep
Will I Lose My House in Bankruptcy?
Easy. You will not lose your home by filing bankruptcy. In Arizona, a family can file bankruptcy and protect their home and it’s equity up to $150,000. Most homes have limited or small amounts of equity and a homeowner merely needs to remain current on their mortgage payments to keep their home. If a home has significant equity, we often advise clients to get a residential appraisal prior to filing a case. That said, we have filed many thousands of cases and never had a debtor lose their home from having filed bankruptcy.
In the rarest of instances, a home could have equity that creates concern. An attorney will carefully review scenarios where a homeowner has significant equity created through fraudulent transfers or preferential pay downs, or recently purchased a home with liens improperly perfected. When these rare scenarios exist, a homeowner is advised not to file bankruptcy.
Bankruptcy Can Actually Save Your Home
If you are behind on mortgage payments and in default, and even if there is a pending trustee sale, a bankruptcy can temporarily halt a foreclosure or even provide a homeowner the opportunity to bring the mortgage payments current through a repayment plan. The moment you file for bankruptcy, the judge issues an automatic stay which puts a stop to all foreclosure activities. In addition, in a Chapter 13, you can legally eliminate second mortgages through a process known as “lien-stripping.”