Through reading on this site I see that I can only have $12,500 in equity in my home in filing a chapter 7 bankruptcy. Is this true even if I do not include my house loan in the bankruptcy? I suffered a couple of tough blows and I need to file on $40,000 in credit card debt. I would want to continue to make my house payments as scheduled, and keep my home.
-- Cynthia
A.
There are several issues that intersect in "can I keep my home" in a Chapter 7 case. One is what the equity in the house is: the difference between today's value of the house and the total of secured debts on the house. Each state has a difference set of exemptions that specify how much equity you can have and have the property fully exempt.
Trustees don't always elect to sell houses with equity over and over the exemption. Most trustees look at the costs of the sale and the administrative costs of the bankruptcy and only chose to sell houses where a meaningful dividend can be paid to creditors after payment of the secured debt; the exemption; and the costs of administration.
Then, there is Chapter 13, where you keep your assets and pay your creditors what they would have gotten in a Chapter 7, over a span of 3-5 years.
See an experienced bankruptcy attorney who can walk you through your options.
