Saturday, January 2, 2021

Keeping Your Home After Filing Bankruptcy

Deciding to bankrupt yourself 

Bankruptcy is the ultimate course of action for most individuals in coping with significant debt issues after all other alternatives have been exhausted. Given the negative connotations, bankruptcy is an ideal option since the burden of severe debt would be eliminated. The greatest possible loss when bankruptcy is declared, however, is undoubtedly your house. That is if there's a home you buy. For most people, their greatest and most valuable resource is their home. Fear of this failure is typically what keeps thousands of people from filing bankruptcy when they should. This uncertainty is used by many debt management firms to trap debtors in debt- management schemes that have little long-term value to the debtor. Of course, for those with financial difficulties, bankruptcy can never be an easy decision; if it is the only choice available to help a debtor recover their financial independence, it should be considered.

If bankruptcy is the only option open, they must sell their home as a landlord and use any earnings before declaring bankruptcy to minimize their debts. But what if he can't sell his house to the homeowner? In our current housing market environment, this is a scenario that is possible, yet a homeowner may easily hand over the keys to the mortgage company and move out. As we all know, the impossible thing for homeowners is getting out like this. If it was that easy to move out in a financial crisis, several eviction firms would be out of business. 

Now, they should be conscious of the minimal steps they may pursue to protect their property if any homeowner is in this situation. 

The Effects on Property 

The ownership rights or the "title deeds" of the homeowner will legally be passed to the courts/trustee when a homeowner declares bankruptcy. This implies that the courts would become the new owners of the property immediately, thereby granting them the right to sell the home. It is the profits of every future transaction that will be distributed to the creditors.

However, before this happens, there is a 12-month grace period during which a bankrupt homeowner has the opportunity to find a new home or to save his home through a third party.  

If you're drowning in debt, and it seems like you're never caught, then having our Montgomery bankruptcy lawyer help you by filing for protection under the Bankruptcy Code could be the best option, depending on your financial situation.

The 12 Month Grace Period

Another question that might come up is what happens if the 12-month grace period expires? What if the property could not be sold? In answer to the first question, the trustee will start looking for a preferred purchaser, and if the property cannot be sold, the property will be charged until it is sold, although it is important to note that, after a certain number of years, ownership may be returned to the bankrupt debtor if it is not sold; however, this is very unlikely. 

Other Option

Another option is to ask the court, when bankrupt, to sell the property to a family member or a third party who has the resources to assist you. This can help ensure that you stay at home, even if you have a different and familiar owner. It will be possible if the opportunity arises to buy back the property in the future. If you are thinking of transferring your house to family or friends before you go bankrupt, forget about it because the bankruptcy legislation gives the trustee the power to look at gifts or assets transferred below market value. Assets transferred- between 5-7 years before the declaration of bankruptcy may be exempt from this consideration. 

2020 has been one of the toughest times in history- as the new year comes let us look forward and stay positive and look at things from a bright perspective. 

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