Piling debt can quickly become overwhelming, especially in situations where the debtor’s home is on the line. One of the scariest parts of facing bankruptcy is the possibility of ending up homeless. Fortunately, modern laws keep in mind that putting people on the street only further complicates bankruptcy, and there are ways to keep your home as you face this challenge. Whether you contact one of many companies that buy houses and rent them back to you or address the process properly, there are a number of ways to keep your home.
There are two main paths to bankruptcy, each depending on your debt situation. In both types, there is a way to keep your home based on equity and your ability to continue covering mortgage payments. In order to decide on the type of bankruptcy, the court performs a thorough analysis of your debt and situation.
Chapter 7, also known as liquidation, sees you liquidate or sell your assets in order to pay off most of your debt. Here, you can keep your home if you’re up to date on your mortgage and can continue to pay it in the foreseeable future.
Chapter 13, on the other hand, gives you three to five years to catch up on debt, including your home. This means that you must continue to pay lest you lose the property.
Both chapters are subject to a homestead exception regulated by your county. This homestead exemption may allow you to keep your home if the protected equity covers your home’s equity, and you can cover the mortgage for the foreseeable future. Otherwise, the property may be foreclosed. However, you can still sell your house and rent it back.
Foreclosure is an intense process that forces you to vacate the house at once as the property is returned to the mortgage lender. Fortunately, the system also allows for the mortgage lender (now owner of the house) to lease the property back to the original owner instead of selling it to make back their investment.
The leaseback allows you to use the property while you navigate bankruptcy proceedings without owning the property at all. It’s a way to sell your house and rent it back.
The bankruptcy chapters, as well as the law behind foreclosure and leasebacks, are available to everyone in the country, but the extent to which they apply to each case depends entirely on the county where the situation is transpiring. The team at Sell2Rent is prepared to assist you in making the right choice for your property.