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If I Have Equity in My Home, Can I Still File for Bankruptcy?

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If I Have Equity in My Home, Can I Still File for Bankruptcy?

If I Have Equity in My Home, Can I Still File for Bankruptcy


Bankruptcy laws can be complex and confusing. If you are contemplating bankruptcy, you probably have many questions and concerns regarding what will happen to your assets during the process.

If you have equity in your home, which means your home is worth more than you owe on your mortgage, you may believe that you will have to use that equity in order to pay off debts should you decide bankruptcy is your only option. However, this may not be the case.

Homestead Exemption

The federal government as well as some states offer what is known as a Homestead Exemption during bankruptcy.

Under this exemption, a certain amount of equity in the home is protected from seizure during bankruptcy proceedings. Although Pennsylvania does not have a Homestead Exemption separate from the federal statute, you qualify for the federal exemption, which is currently $22,975. This means that if the equity in your home is $22,975 or less, you are not required considered in determining the assets available for paying your creditors.

Higher Equity

If the equity in your home is higher than $22,975, the trustee in your bankruptcy case may be able to sell your home in order to pay your creditors if you file Chapter 7. If you file Chapter 13, the value of your non-exempt assets are used to determine the amount of your repayment plan.

If your equity is significantly higher than the exemption, it may mean a higher repayment plan and your creditors may be awarded more of what you owe than if you did not have equity in your home.

Contact a Bankruptcy Attorney

In most cases, people who are considering bankruptcy are struggling not only with unsecured debt, but with debt that is secured by property, such as a vehicle or a home.

Often, the first question asked of a bankruptcy attorney is whether a home or vehicle can be protected during the bankruptcy proceedings. If you are significantly behind in your mortgage, your vehicle payments or any other types of debt, it is critical to contact our bankruptcy attorneys as soon as possible in order to begin taking steps that will protect your assets. They can advise you regarding your exemptions and where you stand under bankruptcy laws.

If you or a loved one is facing mounting debt, collection calls or foreclosure, contact The Law Offices of Georgette Miller and Associates today at 1-866-964-6529 or complete our simple contact form to set up a consultation with a bankruptcy attorney. You can begin your fresh start today.