Is My Home Protected in Bankruptcy?

If you own your home and are scared to file bankruptcy because you fear you may lose your home, you’re not alone! Many people are hesitant to consider bankruptcy because of the risks it may pose to their home and it is frequently one of the most common questions we are asked. Our homes are where we build our lives and it can be scary to consider the possibility of losing what you have worked so hard for! Fortunately, with a bankruptcy, there are ways to protect your home.

In a bankruptcy, there are things called exemptions. These exemptions are used to protect specific assets so that they are not liquidated in the bankruptcy process. That being said, these exemptions can cover a certain amount of equity in your home. 

There are two types of exemptions, Federal and State. Federal exemptions are used if the equity of your home is relatively low. For example, if you have recently purchased your home or you have secured debt against your property, that decreases the equity. The federal exemptions can protect around $31,000 in real estate equity for an individual filing. 

State exemptions are a little different. These exemptions are used when the equity of the home is greater than what can be covered by the federal exemptions. These exemptions are mainly used if you have owned the home for a long time and the secured debt has been paid down, increasing the equity in the home. With the state exemptions, up to $510,000 of equity can be protected. 

Keep in mind that these exemptions are applicable to homes that you reside in. If it is for a property that you don’t reside in, such as a property you’re renting out or a home you may use seasonally, the state exemptions cannot be used to protect this property. However, that does not mean you are out of options and cannot file for bankruptcy! We will help walk you through your options!

CALL NOW FOR A FREE STRATEGY SESSION FROM AN MN BANKRUPTCY LAWYER AT LIFEBACK LAW FIRM

If you have questions about bankruptcy and want a free consultation to go over your options, visit www.lifebacklaw.com to speak with an attorney!