Just the thought of filing bankruptcy can be stressful or make you feel defeated. You may have already cut your expenses in every possible way and negotiated with creditors, but still not have enough money to keep up with your basic needs and debt payments. At this point, bankruptcy may be your best option, but many people put off filing out of fear that they will lose their home. In many cases, this is not something to worry about as long as you prioritize your mortgage payments over other bills. The goal of bankruptcy is to give you a new start, which would be difficult to do if you had to start from nothing. The bank does not want to take your home; they would rather receive some payments and not have to deal with foreclosure and selling the home.
To assist you in keeping your home, the court allows certain exemptions for property. These exemptions are also used to keep your Chapter 13 repayment plan affordable. The guidelines are revised from time to time and also vary by state, so it’s absolutely necessary to work with an experienced bankruptcy attorney when stakes are this high.
Keeping Your Home
The homestead exemption is designed to protect the equity in your primary residence, which means your home, condo, townhome, manufactured home, or floating home. In Oregon, up to $40,000 in equity is exempt, and that amount is bumped up to $50,000 for married couples. This needs to be where you, your spouse or your children primarily live, even if you are temporarily absent and plan to return. The exemption also applies if you intend to sell the property, and will protect your proceeds if you plan to use that money to purchase another home or pay rent for up to a year.
Oregon laws allow you to choose the Oregon state exemptions or federal exemption values, and you do not need to file a homestead declaration to claim this exemption. If your equity exceeds the set values, you have the option of using the wildcard exemption, which could save your home. This allows up to $1225 plus $11,500 of any unused portion of the homestead exemption.
Ask for Guidance
When you have a mortgage and want to keep your home but are dealing with overwhelming debt, it can be difficult to decide what to do. It may be best to sell your home, rent for a while, and start over, or you may want to file bankruptcy to discharge other types of debt while keeping up with your mortgage. These are big decisions, and it’s important to get professional guidance before moving forward. I’m here to answer any questions you have about debt, bankruptcy, and the best way to use exemptions to preserve your property and assets. If you’re uncertain how to handle your debt, give me a call. We’ll discuss your options and make these decisions together.