What is the Homestead Exemption in Bankruptcy?
Owning a home is challenging, but also rewarding if you are able gain more equity over time as you pay off the balance on your home loan. This is the ideal goal for homeowners, but it isn’t the reality that many of us face today. With a slow economy and competitive job market, many people simply cannot afford their homes anymore. When foreclosure becomes a real possibility, turning to bankruptcy may be the best option for being able to keep your home.
Many people are able to take advantage of a homestead exemption in both Chapter 7 and Chapter 13 bankruptcy, which allows debtors to exempt a certain amount of equity they have in their home. State law varies on the exemption amount, and some states allow individuals to choose either the state exemption amount or the federal exemption amount.
Further, some states, such as Pennsylvania, do not have a homestead exemption, so the federal homestead exemption may be utilized. However, if you choose to use the federal homestead exemption if filing for bankruptcy in a state like Pennsylvania, you will have to use all federal exemptions, as opposed to some state exemptions and some federal exemptions. The current federal homestead exemption amount is $22,975. Some states, like New York, have a higher exemption amount than the federal amount. Depending on what county your residence is located in, the homestead exemption amount for you in New York ranges from $75,000 to $150,000.
The greater the homestead exemption amount, the greater the amount of equity an individual is able to protect. However, if for some reason you may not be able to utilize the homestead exemption, your trustee in a Chapter 7 bankruptcy can sell your home to pay off your creditors. This is a frightening thought, and is all the more reason why it is important to consult with an attorney who can provide you with your best options for being able to keep your home. If you file for Chapter 13 bankruptcy, you may be able to use the homestead exemption to lower your monthly payments through your Chapter 13 repayment plan.
Because home ownership is so important, and losing your home can be devastating for you and your family, it is essential to do whatever you can to protect your home. Many people who will not consider bankruptcy often lose their homes through foreclosure. When dealing with debt and the inability to make timely mortgage payments, you must act as quickly as possible to increase the chances that you will be able to keep your home. If you are able to take advantage of a homestead exemption, you will likely be in a position to keep your home for years to come.
Contact The Law Offices of Georgette Miller and Associates, P.C. Today
Keeping your home is undoubtedly one of the most important goals you may have when choosing to file for bankruptcy. Some individuals are simply not able to keep their homes, however, there are also situations where keeping your home is certainly a possibility. To determine whether or not you may be able to utilize the homestead exemption when filing for bankruptcy, it is essential that you speak with an experienced Bankruptcy Attorney right away. At the Law Offices of Georgette Miller and Associates, P.C., our seasoned Bankruptcy and Debt-Management Attorneys will work diligently to ensure you are making the right decisions when filing for bankruptcy. With offices in Philadelphia, PA, New York, New Jersey, Washington, D.C., and Greenbelt, MD, our attorneys are able to reach a wide range of individuals and businesses in need of legal representation for their bankruptcy matters. To speak with one of our attorneys, contact the Law Offices of Georgette Miller and Associates, P.C. today by calling (866) 96-GMLAW to set up an initial consultation.