Using a Personal Bankruptcy Proceeding to Keep Your House
One of the most common factors leading to the decision to file for bankruptcy protection is the inability to stay current on mortgage obligations. If you’re in over your head, a Chapter 7 bankruptcy proceeding can allow you to permanently discharge certain debts. That usually involves turning the property over to the bankruptcy court. For example, you cannot discharge mortgage debt entirely and keep your house. That doesn’t mean, however, that you can’t file under Chapter 7 if you have mortgage debt. It is possible to discharge some debts and keep your home. Here’s how it works.
The Texas Homestead Exemption
Under both state and federal law, certain types and values of property are exempt from sale in a Chapter 7 bankruptcy proceeding. Unlike many states, Texas has a homestead exemption that allows you to protect the full value of your home. There are, however some acreage limitations. For property in a city, town or village, the maximum is 10 acres. For rural property, it’s 100 acres. However, if the rural property has residents, 200 acres can be exempted.
The homestead exemption covers all property associated with your primary residence, including improvements, such as roads, swimming pool and fences. You can also claim a homestead allowance for a burial plot.
To claim the homestead allowance, you must have purchased the real property at least 1,215 days before your Chapter 7 petition was filed.
It’s important to understand, though, that when you claim your home as exempt under the Texas homestead exemption, that prohibits you from discharging the mortgage debt attached to the property. You will still owe the balance of your mortgage.
Contact Heath, TX Bankruptcy Attorney Carrie Weir
I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.
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