Q: If you've rec'd a foreclosure notice and considering bankruptcy, can you keep your home if you have equity?
I think it's called an automatic stay
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A:
When you file for bankruptcy, the automatic stay goes into effect immediately, stopping the foreclosure process temporarily. This gives you some breathing room to explore your options and assess your financial situation without the threat of losing your home right away.
If you have equity in your home, you may still be able to keep it depending on the type of bankruptcy you file. In Chapter 13 bankruptcy, you can propose a repayment plan to catch up on missed payments over three to five years, which could allow you to stay in your home. However, you’ll need to stay current on future mortgage payments during the plan.
In Chapter 7 bankruptcy, things can be more complicated if you have significant equity. Virginia offers a homestead exemption, but if your equity exceeds the exemption limit, the bankruptcy trustee might sell the property to pay off creditors. It’s important to evaluate your equity and exemptions carefully to make sure bankruptcy is the right step for keeping your home.
Martha Warriner Jarrett agrees with this answer
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