What happens to your home if you file for bankruptcy in New York State?
When you file for bankruptcy, all the property that you own becomes property of the estate, and unless it is exempt, the trustee has the right to liquidate it and give the proceeds to creditors. The homestead exemption applies to real property that is considered to be your primary residence. After the 2005 bankruptcy law amendments, the New York bankruptcy law homestead exemption rose to $50,000.00 for individuals and $100,000.00 for those filing jointly.
If you want to file for bankruptcy in New York State and you own a home which is your primary residence, you should determine the amount of equity that exists in the property. If the equity is $50,000.00 or $100,000.00 (depending on if you are filing alone or jointly), then you can file for chapter 7 bankruptcy without losing your home. If on the other hand, the equity in your real property is over the exemption limit, you still have the option of filing for chapter 13 bankruptcy if you qualify.
What are some of the benefits of Chapter 13 bankruptcy if you own real property?
Under chapter 13 bankruptcy you can keep real property even if the equity is greater than the exemption limit by making regular payments to mortgage lenders. Also, chapter 13 bankruptcy allows you to cure any arrears that you may have to your mortgage lender. These arrears can be paid as a part of the chapter 13 plan.
To get more information on the impact of bankruptcy on your real property, contact us at drevzin@revzinlaw.com.