Filing for bankruptcy can be a challenging process. But if it means a clean financial slate, it might be your best option to clear yourself of all your existing debts. Luckily, there are two different types of bankruptcies you can file for: a Chapter 7 and a Chapter 13 bankruptcy, each with its own pros and cons.
However, one of the possible reasons people are hesitant to file for bankruptcy is that they believe all their properties – including their homes – will be taken. This is not necessarily the case, and depending on how you file for bankruptcy, it is possible to keep your home. Here’s how the bankruptcy laws in Los Angeles work and what you can do with your home while filing for bankruptcy.
Chapter 7 vs. Chapter 13 Bankruptcy
First, let’s explain the difference between a Chapter 7 and Chapter 13 bankruptcy. A Chapter 7 Bankruptcy is when you sell some or all of your properties to pay off your debt. Your properties will be sold off or liquidated, and the income garnered from it will be used to pay off your creditors. This is the better option if you don’t have the income to feasibly pay off your debts within the next five years.
On the other hand, a Chapter 13 bankruptcy allows you to keep your property as long as you can repay a restructured repayment plan for your debts for up to give years. This is the ideal option for people who don’t want to lose their properties and have stable income that can help them repay their debts.
Keep Your Home
Under certain circumstances, it is possible to keep your home whether you file for a Chapter 7 or Chapter 13 bankruptcy. Factors like exemptions, your current mortgages, your marital status, and more can have a say if your home qualifies as an exemption. You’ll have to discuss this with your bankruptcy lawyer to know your options given your unique situation.
Chapter 7: Liquidate Your Property
Under Chapter 7 bankruptcy, your home can be liquidated and the funds from that sale will be used to pay off your creditors. The biggest advantage to this is if you do not have a lot of disposable income, liquidating your property will clear you of all debts.
For instance, let’s say that you have a total of $1 million dollars in debt to several creditors, and your home in Los Angeles sells for $800,000. Rather than pay the entire debt, if your home is your only asset, the government will liquidate your home and divide the liquidated funds to your creditors accordingly. Even though you technically still have $200,000 in unpaid debt, this will be forgiven and you will be cleared of all debt.
Sell Your Home to a Professional Home Buyer
Let’s say that, with the help of a lawyer, you applied for a Chapter 13 bankruptcy and managed to keep your properties. But during the time you’re paying off your debts, you might find it in your best interests to sell your Los Angeles home.
You could spruce it up and put it up on real estate listing websites. But remember: you have up to five years to repay your debts, so unless you have a pretty good network of people looking to buy property like yours, time isn’t a luxury you have at the moment.
This is where professional home buyers like In House Offer come in. We buy houses as-is with cash, removing the time-consuming process of applying for a loan or sprucing up your home to make it attractive to sellers.
There are no real estate agents involved, so there are no commission fees deducted from what you earn. We shoulder the closing costs, inspections, and all the other aspects of selling a house. All you have to do is accept our fair cash offer and then let us handle the selling process for you.
In certain types of bankruptcies, you still have full control of your home and your other properties. For real estate property you want to sell fast, consider the professional home buyer that provides fair prices for your home and handles all the additional costs of closing.
Contact us today to get a fair price on your Los Angeles property.
