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Can I Keep My House If I File Bankruptcy?

A common bankruptcy myth is that you will lose your home and all your assets after you file for bankruptcy. However, you can retain ownership of your home (and other assets). Maintaining possession of your home depends on how you file, the type of property it is, and the value of the property.

Which Bankruptcy Chapter Should I File to Keep My House?

When filing for bankruptcy as a consumer, you will file under Chapter 7 or Chapter 13 bankruptcy. Depending on which chapter you file under, there are different considerations when trying to keep your home. You will need to meet the respective requirements of the chapter you file under.

Before you file for bankruptcy, you are required to take a means test. With the means test, your income is compared to California’s median income. If your income exceeds the state median, you are not eligible to file for Chapter 7 bankruptcy.

Protect Your Home in Chapter 13 Bankruptcy

Filing for Chapter 13 bankruptcy means you can keep what you own, but you must pay the value of nonexempt property equity. With this bankruptcy filing, you are expected to create a repayment plan, which can include past-due mortgage payments. You can protect your home and catch up on missed payments, but you must keep up with the repayment plan. It is important to be realistic about whether you can manage the payments.

Protect Your Home in Chapter 7 Bankruptcy

When you file for Chapter 7 bankruptcy, a bankruptcy trustee will sell your nonexempt assets and give the proceeds to creditors. With this filing, you can protect your home and its equity with a bankruptcy exemption. Unlike with Chapter 13 bankruptcy, you need to be up to date on your mortgage payments as there isn’t a repayment plan with this filing.

What Is Fraudulent Conveyance?

If you remove your property from the state or fraudulently sell or conceal your property with the intent to defraud, hinder, or delay creditors, you are guilty of fraudulent conveyance (Cal. Penal Code § 154). Fraudulent conveyance is a crime.

You should not try to protect your home (or any assets) by putting property titles in family members' or friends’ names. You could face up to one year in jail and/or a maximum fine of $1,000. Whoever you give your property can also face serious consequences.

Protecting Your Assets during Bankruptcy

You worked hard for your home (and other assets), and you don’t want to lose the home you love. When you move to file for bankruptcy, the best way to protect your home is to reach out to a trusted attorney. An experienced bankruptcy lawyer will understand what assets are exempt in bankruptcy petitions as well as which exemption system will best suit your needs.

If you need help with bankruptcy filing and securing your property, you can trust the Murrieta bankruptcy attorneys at Singleton Smith Law Offices. We are dedicated to supporting our clients and securing their assets as they navigate filing for bankruptcy. At this time, we’re only handling Chapter 7 Bankruptcy’s. For a free initial consultation, call our office at (951) 779-1610 or reach out to us online.