Can I Keep My House if I File for Bankruptcy in Pennsylvania?

Your house is usually one of the most important places for you. You may have fought long and hard to get it, and you may not want to give up the everlasting memories you forged there. However, all of these great things may be in jeopardy when your creditors try to take it away from you. Unfortunately, you could lose your home to your creditors if you build up excess debt. However, there are ways to protect your home from your creditors during bankruptcy proceedings. Young Marr & Associates’ Pennsylvania bankruptcy lawyers invite you to keep reading as we discuss whether you can keep your house if you file for bankruptcy in Pennsylvania.

What Happens to My House if I File for Bankruptcy in Pennsylvania?

Every year, thousands of Americans file for bankruptcy due to financial hardship. Many times, and due to no fault of their own, homeowners see themselves buried under excess debt, which makes it hard to meet their monthly obligations. People may have to choose between buying the week’s groceries and paying their mortgage. That is why many debtors turn to bankruptcy as a means to deal with their financial hardship. In some cases, bankruptcy might help you protect your house.

Generally, if you have credit card debt, it is considered “unsecured debt.” This means your credit card debt is not secured by collateral, such as a house. Therefore, your credit card company cannot go against assets like your house right away when they try to collect on your debt. However, they may be able to obtain a judgment allowing them to go against some of your other assets to satisfy your debt. That usually helps keep your house from creditors – but only for unsecured debt.

Things can be very different when you have secured debt. Unlike unsecured debt, your mortgage is secured by collateral. In other words, the bank is specifically authorized to go after your house if you don’t pay your mortgage. Banks will often enforce that right to go against your house regardless of your financial situation. One of the ways your mortgagor will do this is through mortgage foreclosure in Pennsylvania.

Foreclosure is a legal process by which your creditor can take title to your house, sell it, and satisfy your debt with the proceeds. If your house is foreclosed and sold, you may be forced to move, which can add additional stress to an already difficult situation. You may be able to protect assets such as your home and your car through bankruptcy.

How Can Bankruptcy Help Protect My Home in PA?

Fortunately, you can often protect your home by filing for bankruptcy. There is a common idea that bankruptcy is some sort of “trap” or that bankruptcy will take everything from you. However, nothing could be farther from the truth.

The very goal of the Bankruptcy Code is to assist debtors in restructuring and managing excess debt in order to avoid financial catastrophe and help creditors get paid. Over the years, bankruptcy has made economic recovery possible for millions of Americans.

Furthermore, the bankruptcy process has allowed many people to protect their homes against foreclosure actions from their creditors. You may wonder how you can protect your property from foreclosure by filing for bankruptcy in Pennsylvania. Fortunately, bankruptcy laws contain a series of protections to help debtors pay back what they owe.

As soon as you file for bankruptcy, you obtain the protections provided by an “automatic stay.” An automatic stay is a legal mechanism that prevents your creditors from engaging in debt collection actions or foreclosure while your bankruptcy case is underway. The effect of this protection is immediate, and your creditors will not be allowed to take your home away from you starting the moment the stay is activated.

What Type of Bankruptcy is Right for Me in Pennsylvania?

As a debtor, it is easy to feel lost and hopeless, especially when going through bankruptcy. Bankruptcy can help you get rid of debt or restructure your finances though a plan depending on the chapter you file under. If you want to protect your house, that might affect which chapter you choose.

There are two common chapters under which most debtors file for bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy in Pennsylvania

Chapter 7, or “liquidation bankruptcy,” is a process where a debtor can discharge most or all of their unsecured debt. Recall, unsecured debt includes things like credit card debt that has no collateral, but it does not include secured debt like a mortgage. All potential candidates must go through a qualifying process before they can file for Chapter 7.

For instance, you will need to go through what is known as a. “means test.” A means test will compare your finances with your state’s median income to see whether you have enough disposable income to satisfy your debt. If your income falls below your state’s median income, you may be eligible for Chapter 7. However, if you are above your state’s median income, you may not use Chapter 7, but you might qualify under another chapter instead.

Chapter 13 Bankruptcy in Pennsylvania

You can also file under Chapter 13 bankruptcy to be put on a wage earner’s plan. Through this process, debtors have the opportunity to devise a 3-to-5-year repayment plan with their creditors. Debtors must make sure to comply with all terms included in the repayment plan in order to have their debt discharged.

This chapter is usually best for bankruptcy filers who want to keep their house. Our Philadelphia bankruptcy lawyers can help explain why in a free legal consultation.

Bankruptcy Law Attorneys Offering Free Case Consultations in Pennsylvania

If you or someone you know is going through a tough time financially, we may be able to assist. Young Marr & Associates understands the difficulties associated with excess debt and how important it is to understand your rights when you’re in debt. For this reason, we dedicate our efforts to protecting your rights and helping you go through the bankruptcy process. Call our Pennsylvania bankruptcy attorneys today for a free, confidential consultation. Our phone number is (215) 701-6519.