Homeowners & Bankruptcy in Maui
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At Blake Goodman, PC, Attorney, we know that homeowners never want to face the possibility of bankruptcy. It’s a taboo word. And, in some households, even uttering the word is considered bad luck. Unfortunately, due to the way bankruptcy is often misrepresented in the media and popular culture, people assume that they will lose everything, including their home, if they file for bankruptcy. This is understandably a terrifying thought for homeowners. However, you won’t necessarily lose your home if you file for bankruptcy.
While each situation is different, bankruptcy may actually be able to help you save your home if you decide to keep it or bankruptcy can help you get rid of your home if it has become too much of a financial burden. You may have options!
Is Bankruptcy Right for Me?
Bankruptcy doesn’t have to be a dirty word. It can help salvage our finances and may help you save your home. If you are a homeowner in serious debt you should consider your bankruptcy options.
If you file for bankruptcy and complete the process, you will:
- Be cleared of most or all of your unsecured debt
- Get a fresh start
- Lower your stress because your debt load has been drastically reduced or eliminated
Which Bankruptcy Option Should I Choose?
If we decide that filing for bankruptcy is your best option, then the next step will be deciding what bankruptcy chapter you can or should file. Whether or not you want to keep your home may be an important factor in which bankruptcy chapter you should file. Our experienced attorneys will analyze your situation and give you your options.
- Chapter 7: If you file for Chapter 7 bankruptcy your debts are eliminated in exchange for your turnover of non-exempt assets that are liquidated by the bankruptcy trustee for the benefit of your creditors. In reality, the overwhelming majority of Chapter 7 filings in Hawaii are “no asset” cases meaning that the exemptions protect the Debtor’s assets, and they keep everything. However, if you own a home or condominium, we will need analyze how much equity you have in the property to determine whether you’ll be able to keep it if you file for Chapter 7 bankruptcy.
- Chapter 13: If you have a certain level of regular income through employment or other means you may be able to file a Chapter 13 bankruptcy and propose a payment plan to your creditors. People who file for Chapter 13 bankruptcy keep all of their property in exchange for making a monthly plan payment to the chapter 13 trustee. This form of bankruptcy also allows our clients to catch-up on missed mortgage and/or association payments over time so that they can avoid foreclosure and stay in their homes!
What Happens To My Home in Bankruptcy?
If you are looking to save your home or condo and are behind on mortgage and/or association payments, a Chapter 13 bankruptcy will allow you to catch up on those missed payments over a three to five year period. You can do this so long as your able to make your monthly mortgage and association payments going forward in addition to your Chapter 13 plan payment to the trustee. By doing this you can avoid foreclosure and remain in your home!
If you are current on your mortgage payments and have limited equity (or hold title to the property with your spouse as “tenants by the entirety”), you may be able to file for Chapter 7 bankruptcy and keep your home. The entire Chapter 7 process usually lasts about three to four months. Once you receive your Chapter 7 discharge order your personal liability to pay the mortgage is also eliminated but the deed of trust on your home or condo. So long as you continue to make your regular monthly mortgage payments you will be able to keep the property.