When we file a chapter 7 bankruptcy petition for our clients, our usual goal is for the client to obtain a discharge. This means that if the case is successfully completed our client will have all or virtually all of their debts wiped out, and they will keep whatever property they own. That's the goal.
People sometimes have the impression that if they file a chapter 7 case they could lose their home. Well, it can happen, but if your chapter 7 case. is properly set up, you will not put yourself in jeopardy of losing your home. The key is that you file chapter 7 when you don't have a whole lot of equity in your home. By way of example, if your home is worth $200,000, and you owe $175,000 to pay off the mortgage, you won't be in jeopardy of the trustee selling your home in a chapter 7, because you are within the legal limits of the amount of equity you can have in your home. If there are 2 homeowners, they can have a combined equity of about $50,000, so the mortgage payoff could be $150,000, and their home would still not be in jeopardy of being sold by the trustee.
On the other hand, what if the mortgage payoff is $100,000? Well in that case I would hope that your lawyer would tell you not to file a chapter 7, because $100,000 is too much equity to have in your home and file a successful chapter 7 that let's you keep your house.
There are some complexities in situations such as this, and your best bet is to speak to an experienced bankruptcy attorney who can explain to you when too much equity in your home would result in the chapter 7 trustee trying to sell your home to pay off some of those creditors of yours. If your chapter 7 is properly set up, there would be very little risk that the trustee would ever try to sell your house.
Many people have questions involving this area of Chapter 7 bankruptcy, so why not give us a call whenever its good for you. We are happy to take your calls and answer any questions you have.
Call us at 856-696-8300.