Buying Time on Your Home with a Straight Bankruptcy
Aug. 3, 2010
You might have heard that a Chapter 13 “payment plan” can be a good way to stop a foreclosure of your home and allow you to keep it. But what if you don’t want to keep the house, instead just need a little more time to finish a pending sale or to be able to find another place to live? Or maybe you don’t want or need the extra benefits of Chapter 13, and just want to put it all behind you in a few months instead of the 3-to-5 years that Chapter 13 takes to finish. A Chapter 7 “straight” bankruptcy may be just what you need.
In a Chapter 7 case:
1. As long as you have not filed another bankruptcy case recently, the filing of a Chapter 7 case STOPS a foreclosure in its tracks, just as quickly as a Chapter 13 filing.
2. A Chapter 7 filing stops not only foreclosures by your mortgage company, but also by the county tax assessor for unpaid property taxes, by the IRS on tax liens, by ex-spouses on support liens, or creditors who sued you and got a judgment lien attached to your house.
3. Filing a Chapter 7 also PREVENTS most kinds of liens from attaching to your home, and in some cases that could make a difference of tens of thousands of dollars.
Example: Let’s say you had $30,000 equity in your home, but owed the IRS $30,000 in income taxes from 4 years ago. If you filed a Chapter 7 case before the IRS attached a tax lien to your home, you may well be able to write off the tax debt and keep the equity in your home because of the homestead exemption. But if you delayed filing the Chapter 7 case until after the IRS filed a tax lien, you would likely have to pay that debt out of the equity in the house (because tax liens trump the homestead exemption), leaving you with nothing.
#1: In a Chapter 7, the minute you file your case the case trustee has some say in all your property, including any real estate. This may be fine if there is no equity or less than the homestead exemption allows. But this is a dangerous area where you absolutely need a competent attorney’s advice.
#2: Chapter 7 IS much less flexible than Chapter 13, and usually buys you much less time.
Figuring out whether ANY kind of bankruptcy is right for you and your home, or is not, is a serious matter. But we will lay out all the options for you honestly & clearly so that you can be comfortable with whatever decision you make. Let us help you find the best path.
Portland Bankruptcy Law Group has the experience and knowledge to handle your case. Our bankruptcy attorneys are extremely familiar with and are well versed in all aspects of bankruptcy law. Contact us today!