Home ownership is the American dream. It’s also the largest purchase that many will make in their lives and in many ways, our homes define who we are. When people encounter financial difficulties, it’s natural to want to protect their identities, including their homes. One of the biggest myths of bankruptcy is that filers will lose their home. To the contrary, bankruptcy can be used to save a home by protecting it from foreclosure and allowing homeowners to reorganize their finances through affordable payments.
Protecting Your Home
While some are able to save their homes in spite of a Chapter 7 filing, it will not strictly protect a filer’s home. Foreclosure can be prevented through Chapter 11 and Chapter 13 bankruptcies. The two bankruptcies are very similar in their structures. The primary difference is in the types of debt that can be included on each. However, both essentially provide filers with the opportunity to seek protection of creditors and collectors while they restructure their finances and make payments in more affordable amounts.
In the state of Texas, the type of bankruptcy for which one is entitled to file is determined by the courts after an evaluation of the filer’s financial records for the past couple of years. It’s possible to petition for one type of bankruptcy and be denied permission for that chapter to be discharged but granted permission to discharge another. Although it’s not required, it’s highly recommended that one consult with a bankruptcy attorney about the various options when considering a bankruptcy.