If you own a house in Brooklyn NY and file for bankruptcy, whether you get to keep the house depends on several factors. To help you make sense of this, it’s helpful to understand how bankruptcy works and what happens to your personal property. The good news is that if you want to keep your home, you probably can. And there are different ways to do it.
When you file for bankruptcy in Brooklyn, the idea is that all of your possessions will be sold, and this money will be used to pay back your creditors. However, there are things that you are allowed to keep when you file bankruptcy, otherwise known as exemptions. Some of the things you get to keep are your clothes, household goods and vehicle, as long as it’s not too valuable.
Under New York law, there is an exemption for your home as well. But it’s important to know that if you want to keep your home, you’ll be responsible for paying the mortgage. Let’s learn more about this situation and how you can keep your home in both Chapter 7 or Chapter 13 bankruptcy.
The Homestead Exemption in Bankruptcy
When filing for bankruptcy in Brooklyn, you can use the homestead exemption to protect your home if you have equity in it. Almost every state has a homestead exemption that can be used both inside and outside of bankruptcy.
Homestead protection laws protect homeowners from losing all of their equity during the bankruptcy process. People who file bankruptcy are going through tough financial times, and they don’t have to lose their homes, too. Under New York’s homestead protection law, the amount property owners may declare exempt varies based on location.
For example, in Kings County, the New York homestead exemption is $179,950. When you file for bankruptcy, the homestead exemption will automatically be factored into your case. However, it can look different depending on the type of bankruptcy you are filing.
Bottom line: Bankruptcy is meant to protect your home, not take it away.
Your Brooklyn Home in Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, you have options with your home. What you choose to do depends on your goals and the situation you are in. Do you want to keep the home and continue living in it? Do you want to delay the foreclosure process? Or would you prefer to walk away?
Most people who file Chapter 7 bankruptcy can keep their homes if they are current on their mortgage and don’t have much equity. However, if there is significant equity in the home, it’s more likely for it to be sold because the money can be used to pay creditors.
Remember, though, you can protect your home using the homestead exemption. This prevents the trustee from selling your property. But in order to do this, you must be current on your payments and stay current going forward.
Your Brooklyn Home in Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, you sell and pay a portion of your debts through a repayment plan. This includes your mortgage. You will make payments for a period of 3 to 5 years, and after this time, any remaining debts will be discharged.
To keep your home in Chapter 13, you’ll need enough income to pay your current mortgage and your repayment plan. Assuming that you do, you can keep your home and avoid foreclosure. We recommend this option to those who want to catch up on their payments and keep their homes indefinitely.
However, if your only goal in filing for Chapter 13 bankruptcy is to save your home, it’s best to explore other options first, such as a mortgage modification program.
Schedule a Free Consultation and Find Out if You Can Keep Your Home
Hopefully this has cleared up some of your questions regarding bankruptcy and whether or not you get to keep your home. Fortunately, if you want to keep your home in bankruptcy, you should be able to. For honest, accurate legal advice regarding your financial situation and how to best proceed, schedule a free consultation with The Law Office of William Waldner.