Will I be able to keep my home after declaring bankruptcy in Illinois?

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Question:

Will I be able to keep my home after declaring bankruptcy in Illinois?

Answer:

One of the biggest questions posed by people entering or considering bankruptcy is the issue of whether or not they will be able to keep their house after the bankruptcy is completed.  The answer to this question depends on the type of bankruptcy that you are declaring.  Because bankruptcy laws are federal, not state based, the answer should be pretty much the same no matter what state you live in when you declare the bankruptcy, although each state does set different dollar amounts for homestead exemptions. So, how can you go about keeping your house after bankruptcy in the state of Illinois?To keep your house under Illinois bankruptcy laws, there are several things you will need to do. 

  • One is to consider the type of bankruptcy that you are filing.  The most common form of personal bankruptcy available since bankruptcy laws were tightened in 2005 is the Chapter 13 bankruptcy, where you enter a repayment plan.  
  • Bankruptcy laws allow you to keep your home after declaring chapter 13 bankruptcy if you can get the mortgage company to work with you, which most will do because they do not want to lose the property to foreclosure.  
  • If you file chapter 7, whether or not you can keep your house depends on whether you can make payments. You are only allowed to keep a set amount of equity, up to the state or federal limit set by the homestead exemptions.

You will want to talk with a bankruptcy lawyer to see if you can afford to keep your home after bankruptcy and to see if keeping your house is possible given your situation.

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