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The Basics: Your Home

Bankruptcy can enable you to keep your home through almost countless benefits. Here are 20 of them.

1. Protect equity in your home through the homestead exemption.

2. If you have more equity than the homestead exemption provides for, protect that extra equity through a Chapter 13 filing.

3. Eliminate all or most of your other debts so you can afford your monthly mortgage payments.

4. Eliminate other debts with a “straight bankruptcy” Chapter 7 case so that you can catch up on your back mortgage payments within the time required (usually about a year, but depends on your mortgage lender).

5. Avoid foreclosure with an “adjustment of debts” Chapter 13 case by getting up to 5 years to catch up on your back mortgage payments, throughout that time being protected from the foreclosure.

6. Eliminate other debts to more likely qualify for a mortgage modification.

7. Prevent a property tax foreclosure by paying the back property taxes through a Chapter 13 plan, thereby also taking away a separate justification for your mortgage lender’s own foreclosure.

8. Greatly reduce what you owe on your home by “stripping” off the second (or third) mortgage from your title, saving the amount of that payment each month, and bringing the amount of your home debt closer to the value of your home.

9. Prevent future judgment liens against your home by discharging credit card, medical, and other debts before those creditors sue you and get a judgment and impose a judgment lien.

10. Get rid of a current judgment lien encumbering your home’s title by “voiding” that lien under either Chapter 7 or 13.

11. Prevent the recording of a tax lien on the title of your home by discharging (legally writing off) the income tax debt before the IRS or state taxing agency records a tax lien.

12. After the recording of an income tax lien against your home, discharge the underlying tax debt and (under some circumstances) persuade the IRS or state tax agency to release the lien.

13. After the recording of an income tax lien, if the underlying tax can’t be discharged (usually because it is not old enough), pay that tax under very favorable terms in a Chapter 13 plan, while being protected from all collection efforts against you on that tax, resulting in the release of that lien at the completion of your case.

14. Prevent a child or spousal support lien from attaching to your home by discharging all or most of your other debts so that you can afford to keep current on your support obligations.

15. Prevent a support lien from being foreclosed by catching up on your support obligations through a Chapter 13 plan, giving you as much as 5 years to do so, all the while being protected from that foreclosure.

16. Stop your homeowners’ association from foreclosing on your home for unpaid association dues and/or assessments by paying those off through a Chapter 13 plan.

17.  Get more time to sell your home, either a few more weeks or months through Chapter 7 or possibly even up to 5 years through Chapter 13.

18. If after a dispute with a home repair or remodeling contractor, he or she attaches a construction lien to your home, prevent the lien’s foreclosure and gain leverage in fighting the dispute by filing a Chapter 13 case.

19. Prevent the foreclosure of, and resolve utility liens and local governmental liens on your home, by either disputing them or paying them through a Chapter 13 case.

20. Resolve accounting disputes with your mortgage lender through a relatively favorable and efficient forum, the bankruptcy court, by objecting to its proof of claim filed at court. 

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