Can I Save My Home If I File for Bankruptcy?

When Floridians file for bankruptcy or consider a bankruptcy filing, they often worry that they will lose their home. Not only does Florida have an extremely generous homestead exemption for bankruptcy filers, but bankruptcy in Florida might actually be a tool that can allow you to keep your home when you are behind on payments. Our St. Petersburg bankruptcy lawyers can explain.

Florida’s Homestead Exemption in a Chapter 7 Bankruptcy 

Florida has one of the most generous homestead exemptions for bankruptcy filers in the country. If you are planning to file for Chapter 7 bankruptcy and you reside in a primary residence that you have paid off, you should know that, even though other assets may be “non-exempt” and therefore subject to liquidation, you can exempt all of the equity in your home with use of the Florida homestead exemption.

The exemption does not apply, of course, to a home you are renting. But if you are not behind on your rent, it is possible to enter into an agreement with your landlord to continue renting your residence. In addition, it is important to know that the exemption does not protect you if you are a homeowner and you do not have any equity in your home, but you still want to find a way to keep it. In this circumstance, if you are not behind on your mortgage (despite being behind on payments with other creditors), it may be possible to enter into a reaffirmation agreement with your mortgage servicer.

What is a reaffirmation agreement? According to the US Bankruptcy Court for the Southern District of Florida, a “reaffirmation agreement is an agreement between a Chapter 7 debtor and a creditor that the debtor will pay all or a portion of the money owed, even though the debtor has filed bankruptcy.” Then, “in return, the creditor promises that, as long as payments are made, the creditor will not repossess or take back its collateral.”

Reorganization Bankruptcy to Prevent Foreclosure and Catch Up On Your Mortgage 

If you are not in the types of situations above, but rather you are behind on mortgage payments and need to find a way to catch up, filing for reorganization bankruptcy is an option to actually help you to keep your home. While many people worry that filing for bankruptcy will cause them to lose their home, a Chapter 13 bankruptcy filing (or Chapter 11 if your debts are too high to qualify for Chapter 13) offers an opportunity to get back on track with your home payments and even to avoid foreclosure.

Once you file for bankruptcy, the automatic stay stops all creditor actions — including of mortgage servicers and landlords, which also means foreclosures. Then, through the reorganization nature of this bankruptcy, you will create a repayment plan to catch up on the payments you owe and ultimately to be back on track.

Contact a Bankruptcy Lawyer in St. Petersburg, Florida

 You have many options for keeping your home if you file for bankruptcy, and in many cases, a bankruptcy filing can actually enable you to keep your home when you are behind on payments. If you have questions or want to find out more, you should get in touch with an experienced St. Petersburg bankruptcy attorney at the Law Offices of Stephen Barszcz to discuss your case. Contact us today for assistance.

Sources:

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/0222ContentsIndex.html

flsb.uscourts.gov/reaffirmation-agreement

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics