When facing financial challenges, individuals may explore relief options like Chapter 7 bankruptcy. In this situation, you may have questions about whether you can keep your home if you file for bankruptcy.
Understanding the Indiana Chapter 7 laws can help you make an informed decision.
Defining Chapter 7 bankruptcy
Chapter 7 bankruptcy is the sale of a debtor’s non-exempt assets to settle outstanding debts. This legal process allows individuals to discharge unsecured debts, providing a fresh start.
Protecting your home equity
In Indiana, the homestead exemption safeguards part of the homeowner’s equity in a bankruptcy case. This law lets you retain a certain value of your home’s equity, shielding it from liquidation during the bankruptcy process. Individuals can maintain their primary residence and a sense of stability.
The exemption has monetary limits on the amount of equity you can protect. If the equity in your home exceeds the current limit, the trustee may consider selling your home to satisfy creditors.
Reviewing other important factors
If your home’s equity falls within the exemption limits and you continue making mortgage payments, the chances of retaining your home increase. However, individual circumstances may impact the trustee’s decision. Examples include missed mortgage payments or significant equity beyond the state limits.
More than 239,000 Americans filed for Chapter 7 bankruptcy in 2023 according to data reported by U.S. Courts. If you decide to take this path, it could provide a fresh start for your budget. Exemptions may allow you to keep your home equity as you work to improve your finances.