How Bankruptcy Can Save Your House in California

Most people who are struggling with debt do not lose their homes in bankruptcy. Whether you can save your home in bankruptcy depends on various factors, including the kind of debt you’re carrying and whether you have regular income. You should discuss your situation with an attorney to accurately determine if you can save your house in bankruptcy. To help you get started, though, ask yourself the following two questions:

Do you have any home equity?

San Diego and Chula Vista were hit hard by the housing crisis and, as a result, a lot of people lost equity in their homes. For the majority of these folks, the homestead exemption in California is usually enough to save the family home in Chapter 7 bankruptcy. On the other hand, if you’re seriously underwater in your home, filing bankruptcy might allow you to continue to live in it temporarily by stopping foreclosure for a couple of months.

Alternatively, with a Chapter 13 “repayment plan” bankruptcy, the family home is saved and defaulted mortgage payments are repaid over time. Chapter 13 also offers the option of “lien stripping,” in which a second mortgage could be substantially reduced and as little as 10 percent of it repaid in the repayment plan

Can you afford to pay the mortgage?

Bankruptcy won’t help you save your home if you can’t afford to pay the mortgage—the lender eventually will be able to foreclose. However, with the debt eliminated by a Chapter 7 bankruptcy (e.g., medical bills, credit cards), enough money usually gets freed up to allow you to afford the mortgage. Similarly, with the restructuring of debt under a Chapter 13 bankruptcy, debt payments might be reduced enough that you can afford the mortgage (especially if a second mortgage gets reduced or eliminated).

To learn how bankruptcy may be able to save your home, contact attorney Kerry Denton at Denton Law Group for a free consultation. Call today at (619) 458-3739 and be on your way to a new financial start.

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