Honolulu Bankruptcy and Your Mortgage
Concerned About How Bankruptcy Will Affect Your Mortgage? Honolulu Bankruptcy Attorneys Have the Answers
Hawaii Bankruptcy Firm Understand Bankruptcy and Mortgages
One of the most common questions among those who are considering filing bankruptcy is, "Will I be able to keep my home?"
In most instances you will not lose your home during a bankruptcy case, as long as your equity in the property is fully exempt. Equity is the difference between the value of the property and what is owed on it. Under Hawaii law, the head of a family or someone over 65 has a homestead exemption of up to $30,000, while all others have a homestead exemption of up to $20,000. The property cannot exceed one acre. Federal and state law also allow Hawaii bankruptcy filers to opt for the exemptions that are available under the federal bankruptcy code (though bankruptcy filers must select either the federal or the state exemptions in whole and cannot pick and choose between them). The homestead exemption under the federal scheme is $22,975. If a husband and wife file a joint bankruptcy case and are both on title to their homestead, they are eligible to exempt up to $45,950 of their equity.
In a chapter 7 case, your exemptions may not make any difference to the right of a mortgage holder to take your property to cover the debt if you are behind in your payments. If you have filed for chapter 13 bankruptcy, even if your property is not fully exempt, you will be able to keep it if you pay its non-exempt value to creditors.
However, some of your creditors may have a security interest in your home, meaning that you gave that creditor a mortgage on your home or put it up as collateral for the debt. Bankruptcy does not make these security interests go away, and if you don't make the payments on that debt, the creditor may be able to take and sell your home during or after the bankruptcy case.
How Can I Keep My Property?
There are several ways you can keep collateral or mortgaged property during a bankruptcy:
- Agree to keep making the payments on the debt until it is paid in full
- Pay the creditor the amount that the property you want to keep is worth
- You can challenge the debt, if improper conduct by your creditor is involved
If you are considering bankruptcy but are concerned about your mortgage, the experienced attorneys at The Law Office of Jean Christensen LLLC can advise you of your rights and obligations. Contact our firm online or call 808-521-1202 to schedule your free initial consultation at our Honolulu office today.