No matter how diligent you are at paying your bills and dues, sometimes, life just happens. Eventually, you may experience falling behind on your mortgage payments to the point where you need to declare bankruptcy.
Although being in a state of bankruptcy is no joyful matter, it has to be done. If you’ve exhausted all options available to you and still decided to file bankruptcy, it’s important to know what you’re getting into. You should know what your options are and how they will impact your existing mortgage, or your future ability to obtain home loan financing.
If you’re a homeowner deep in debt, then keep reading, because this article will tell you everything you need to know about bankruptcy and how it can affect your Lexington property. As an added bonus, we will also give you some tips about what you need to do moving forward.
How Does Bankruptcy Affect Your Lexington Property?
Whether or not you keep your property depends on the kind of bankruptcy you’ve filed. Two kinds of bankruptcies are the most used: Chapter 7 or Chapter 13 bankruptcy. If you file under Chapter 13, you’re most likely going to keep your property. But if you file under Chapter 7, then you may have to give up some of your properties. However, keep in mind that this is just a generalization. We will be explaining the difference in depth below.
What’s The Difference Between Chapter 7 And Chapter 13?
Chapter 7 bankruptcy is also known as total bankruptcy. It’s essentially a deletion of all your outstanding debt in exchange for selling or liquidating some, if not all, of your property to pay for the debt. However, the catch is that in a Chapter 7 bankruptcy, it might be difficult to sell your home. If you want to sell, you must first obtain judicial approval. If the court-appointed trustee wants to sell your home to generate cash for creditors, he also must get permission from the court.
On the other hand, Chapter 13 bankruptcy works like a repayment plan. In a Chapter 13 bankruptcy, you file a plan with the bankruptcy court indicating in detail how you will repay your creditors. Some debts will be paid in full, while others will be paid partially, some possibly not at all, depending on what you can afford. It permits you to keep your house or sell it if you benefit but without causing financial harm to your mortgage lender. However, you must still get permission from the trustee to sell or refinance your home when you choose to file a Chapter 13 bankruptcy. Additionally, it is a kind of consumer bankruptcy where you still have enough money to pay your debts partially. In Chapter 13, you’re likely able to keep your property, as your bankruptcy trustee will set up a repayment plan to your creditors, including your mortgage holder.
What Can You Do With Your Property If You’ve Filed for Bankruptcy?
Through wiping out unsecured debt, filing for bankruptcy can lower your debt payments enough each month that meeting monthly mortgage payments is manageable. However, if you are behind on your mortgage payments and realize that even after filing bankruptcy you still cannot afford your Lexington property, you can opt to sell your home as part of your personal bankruptcy. Any shortfall will be processed as an unsecured creditor claim and any equity will be taken by the bankruptcy trustee to be distributed to your creditors.
If you’re thinking of selling your home, why not choose to sell to a professional home buyer? The process is quick, painless, and you get paid in cash. Interested? Look no further than Rylo Homes. Here at Rylo Homes, we buy houses for cash in Lexington, KY. We can help you pay off your debts at no extra cost to you!
SELL TO A PROFESSIONAL HOMEBUYER
If you live in Lexington, Kentucky and are interested in selling your home, we can help here at Rylo Homes. We are a real estate solutions company that specializes in solving your real estate problems for you. We buy houses in Lexington, KY, and will act as your personal guide during your home selling process.
Our goal at Rylo Homes is to improve the overall quality of housing for the residents at Lexington, KY. We buy houses in just about any condition and situation, including foreclosure, late mortgage payments, or fair market value. When you choose to sell to us, you don’t have to wait weeks and months just to get good offers. We’re direct buyers and we pay in cash to arrange a quick close. For more information about our home buying process, give us a call at (502) 513-4430 today.
