If you are a homeowner in West Virginia who is struggling with debt and considering filing for bankruptcy, you may be worried about losing the family home. However, depending on your situation, you may be able to keep it if you file for Chapter 7 bankruptcy.
Equity is the difference between the amount you owe on your mortgage and any other liens and your home’s worth. In West Virginia, you can exempt up to $25,000 of equity in your home if you file for Chapter 7 bankruptcy as an individual, or up to $50,000 if you file jointly with your spouse.
This means that if your equity is less than or equal to the exemption amount, you can keep your home if you continue to make your mortgage payments. However, if your equity exceeds the exemption amount, the bankruptcy trustee may sell your home and use the proceeds to pay off some of your creditors.
The status of your mortgage payments
If you are current on your mortgage payments and have enough income to keep making them after filing for Chapter 7 bankruptcy, you can reaffirm your mortgage debt and keep your home. Reaffirming means that you agree to remain liable for the debt and not discharge it in bankruptcy.
However, if you are behind on your mortgage payments or cannot afford to make them after filing for Chapter 7 bankruptcy, you may face foreclosure or have to surrender your home to the lender.
The type of mortgage
If you have a conventional mortgage that is secured by a lien on your home, you may be able to keep your home by reaffirming the debt or by redeeming the property. Redeeming means that you pay the lender the current market value of your home in a lump sum and get rid of the lien.
Cash or access to credit
However, this option may not be feasible for most homeowners who do not have enough cash or access to credit. If you have a non-conventional mortgage that is not secured by a lien on your home, such as a reverse mortgage or a home equity line of credit, you may be able to discharge the debt in Chapter 7 bankruptcy and keep your home.
However, this option may have tax consequences and affect your eligibility for certain government benefits. As you can see, keeping your home in Chapter 7 bankruptcy is possible, but it depends on several factors and requires careful planning and advice.