Property values are at a high in many areas. If you've owned your home for more than a couple of years, you probably have a fair amount of equity in your house. Many are worried that when they declare bankruptcy, they will lose their home. This is true sometimes, but there are straegies to keeping your home.
Strategy 1: Exemptions
Using your exemptions to keep your home works sometimes. If you are using federal exemptions (most people do) then you may exempt only a small share of your equity. The number changes, but it is around $20,000. If you owe $150,000 on your home and it is worth $170,000, you will be able to exempt your home. If you are filing a joint bankruptcy, you may be able to double this exemption.
Strategy 2: File a Chapter 13
In a chapter 13 bankruptcy, you are usually allowed to keep your home. But, in a chapter 13, you are required to pay back some of your debts. The rule is that your creditors must receive at least as much as they would have if you were to file a chapter 7. So, if you have $50,000 in equity in your home and you want to keep it, you would end up having to pay your creditors the difference between that equity and your exemption amount. The difference is financed in a chapter 13 plan over 3-5 years. In this situation, you could have to pay approximately $650/month to your plan to be able to keep your house. You can learn more about a chapter 13 bankrupcty here
Strategy 3: Using State Exemptions
Some states allow you to use a seperate list of exemptons. For example, in Michigan, you can exempt the entire value of a home if it is owned by the entirety. This means that a husband and wife bought a house together, at the same time, in equal shares, and went on the title together. If you were lucky enough to purchase your home this way, you can exempt all the equity in your home if you choose ot use Michigan's exemptions. Making this election has some other consequences that a Michigan bankruptcy attorney can help you with. Look into your state's exemtpions.
In addition to using these strategies, you will need to continue paying the mortgage on the home or the bank can foreclose. The best way to learn about all of your options for your situation in to talk to an attorney. Bankruptcy is a powerful way to make a new start and begin a path to your financial freedom.