For many people in the Milwaukee area, when contemplating filing for protection under the bankruptcy code, a large concern is whether they can stay in their home, or if the bankruptcy process will force them to leave.
So the short answer to the question “Will I lose my home in a bankruptcy?” is “It depends.” There are many factors, from the amount of equity that you have, to how current you are with your payments.
If you are current with your home mortgage payments and have been experiencing problems with unsecured debts, such as credit card debt or medical bills, you may be able to keep your home in Chapter 7, since it allows you to discharge the majority of that type of debt.
The other factor to consider is your home equity. Wisconsin permits a debtor to protect up to $75,000 of value with their homestead exemption, with a husband and wife each entitled to the $75,000 exemption. As long as your equity is below this amount, a trustee is unlikely to move to sell your home.
It is important to remember that you must keep your payments current on your mortgage during the Chapter 7, because your lender has a security interest in the real estate and could foreclose if you fall behind after the completion of your Chapter 7.
On the other hand, if you are already behind, a Chapter 7 is not likely to help and you will need to file a Chapter 13. This chapter of the bankruptcy code allows you to create up to a five-year plan to repay debts like mortgage arrears. The catch is that you must remain current on the mortgage while repaying the arrears during the three to five years of the plan’s duration.
