It is not uncommon for someone to have equity in their home, but still be struggling financially or missing mortgage payments.  Credit card debt and medical bills only add to the burden.  It is still possible to take full advantage of the bankruptcy laws and keep your home, even if you have equity in it.

Depending on your living situation, you are provided an exemption amount of equity, or “homestead exemption,” which will protect a portion of the equity in your home from creditors.  Any equity above that amount, however, will need to be paid to your creditors if you wish to keep your house.  In a Chapter 13 Bankruptcy, the repayment of that amount is spread out over a three to five year period.

For example, if your home has equity which is not exempt in the amount of $100,000, and your credit card debt is $20,000, you can keep your home in a Chapter 13 Bankruptcy by paying the $20,000 over sixty months, at a rate of approximately $333 dollars per month.  Although in this example, your debt is not discharged, you will have the benefit of spreading out the payments without the penalty of interest, over a five year period.  On the other hand, if your home has only $10,000 equity which is not exempt, you’ll only have to pay your creditors $10,000 over the five year period.  The remaining $10,000 is discharged.  You can also include any missed mortgage payments in the five year plan.

Determining and protecting the equity in your home requires complex analysis, and you should consult with an experienced California bankruptcy attorney if you are struggling with your payments, or have fallen behind.  At The Chernev Firm, we will work with you to maximize the amount of exempt equity in your home, to see that the greatest amount of your debt is discharged, giving you a monthly payment you can be comfortable with. Call our San Francisco bankruptcy law firm today for a free consultation.

The Chernev Firm, 601 Montgomery Street, Ste. 1150, San Francisco, CA 94111