When you start to lose control of your finances, you may consider bankruptcy as a potential means of finding relief. Many myths and misconceptions exist about the bankruptcy process, though, and it is important that you learn to separate fact from fiction to sort through your options.
Among the many misconceptions surrounding the bankruptcy process is a belief that filing for bankruptcy automatically means you must give up your home. This is not definite, though. Instead, it hinges on several different factors, among them whether you move forward with a Chapter 7 or a Chapter 13 bankruptcy filing.
Chapter 7 bankruptcies
You may find that you are more likely to have to give up your home when you file for Chapter 7, rather than Chapter 13. Whether you lose your home with a Chapter 7 bankruptcy depends on how much non-exempt equity you have in it. To determine how much you have, you must take your home’s market value, subtract any loans or liens you have on it and compare the figure against the current exemption amount allowed in Texas.
Chapter 13 bankruptcies
Chapter 13 bankruptcy involves reorganizing your debts so that they become easier for you to manage. If you pay back the agreed-upon amount to your bankruptcy trustee and otherwise keep up with your mortgage payments, you may be able to keep your home despite filing for bankruptcy. However, if you fail to make your mortgage payments or the other payments you agreed to, you run the risk of losing your home after all.