St. Louis Bankruptcy Lawyers Blog
Not if you want to keep it. Filing for a Missouri bankruptcy does not automatically mean that you will lose any of your assets (including your home). But there are certain pitfalls to be aware of, and a whole host of rules that you want to keep in mind.
When you file for bankruptcy, the court requires that you disclose all of your personal belongings (including personal property such as clothes, pots, pans, furniture, appliances, etc.), any real property or land holdings, and any other things in which you may have an ownership interest (like a contract, or stocks and/or bonds). Once this requirement is met, the court then gives you the ability to use certain governmental exemptions to exempt (or keep safe) these items so that the Trustee (the person in charge of overseeing you bankruptcy estate) cannot get his/her hand on them. One of these exemptions is specifically for your home. It allows you to exempt up to $15,000 of equity your home may have. So for instance, if you currently owe $100,000 on the balance of your mortgage loan, and you believe that the fair market value (i.e. the amount of money you realistically believe your house could sell for in the open market, as is, in this particular economy) of the house is $115,000, then on paper, there is no equity, and therefore nothing a bankruptcy Trustee can do with it (because the $15K exemption will cover the equity). In this type of situation (assuming all other requirements have been met), you can file a St. Louis Chapter 7 bankruptcy and not have to worry about whether or not your house is subject to liquidation. If you want to keep the home, you would simply continue to make the regular, monthly mortgage payments.
But if the fair market value of your home is closer to $180,000, then even after the $15,000 exemption is applied, there will still be significant equity left over (180,000 – 100,000 – 15,000 = 65,000 left over in equity). In this scenario, the Trustee in a Chapter 7 would most certainly be interested in liquidating your home (and using the proceeds to pay towards your unsecured creditors, like credit cards, medical bills, and payday loans). So if this is this case, and your goal is still to keep your home, the next best available option would be a St. Louis Chapter 13 bankruptcy. A Chapter 13 is described as a repayment plan over the course of three to five years, during which certain creditors are paid back amounts that are owed. But one of the main bonuses of the 13 is that all assets (whether it is a car, truck, or a piece of real estate) are protected from being liquidated by the Trustee. So if in fact you own a home in which there is equity in excess of the $15,000 that the government allows to be exempted, and you file a Chapter 13, the only consequence would be that you would have to guarantee that excess amount to your unsecured creditors in repayment (so in the example above, if there is $65K in equity beyond the exemption, then you would have to pay back up to $65,000 to your unsecured creditors; but if you only owe $10,000 in total to unsecured creditors, then obviously you would not have to pay any more than that). In this way, you can keep your home safe (regardless of how much equity there is in the asset).
The affordable St. Louis bankruptcy lawyers at The Bankruptcy Company have the necessary experience and expertise to make sure that you are guided through the entire bankruptcy process from start to finish. Our goal is to set you on a path towards financial freedom, and get you the fresh start / clean slate you that you deserve. All phone conversations and office consultations are free of charge.