Filing for bankruptcy is a significant decision that individuals facing financial challenges often consider. However, understanding the process, the potential outcomes, and the impact it may have on their personal assets, such as a house, is crucial. In your case, with a debt of $20,000 and a house that is fully paid off, it is important to assess the situation thoroughly before making any decisions.
When considering bankruptcy, it is advisable to consult with a bankruptcy attorney, who can guide you through the process based on your specific circumstances. The attorney you spoke to specializing in bankruptcy mentioned that you might lose your house if you file for bankruptcy. However, it is essential to understand that the impact of bankruptcy on your property will depend on various factors, including the type of bankruptcy you file, the exemptions available in your state, and the equity you have built up in your house.
First, let’s consider the two most common types of bankruptcy for individuals: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy is often referred to as “liquidation” bankruptcy and is designed for individuals who are unable to repay their debts. Under Chapter 7, a trustee may sell your non-exempt assets to repay your creditors. However, each state has its own set of exemptions that can protect certain assets from being sold during bankruptcy. These exemptions will usually cover essentials such as your primary residence, vehicle, personal belongings, and necessary household items.
In some states, the homestead exemption protects the equity in your home up to a specific dollar amount. If your equity falls within the exemption limit, your house may be safe from liquidation. However, if your equity exceeds the exemption limit, the trustee may consider selling the property to distribute the proceeds among your creditors. Therefore, it is crucial to understand the homestead exemption laws in your state when determining the potential impact bankruptcy may have on your house.
On the other hand, Chapter 13 bankruptcy is known as “reorganization” bankruptcy. With Chapter 13, individuals create a repayment plan to pay off their debts over a specified period, usually three to five years. This type of bankruptcy allows you to keep your property, including your house, as long as you continue to make regular payments according to the court-approved repayment plan. Chapter 13 bankruptcy can provide an option to catch up on missed mortgage payments and help you keep your home.
In your situation, where you have a fully paid-off house and $20,000 in debt, both Chapter 7 and Chapter 13 bankruptcy may have different implications. It is crucial to consult with an experienced bankruptcy attorney who can review your specific financial circumstances and provide personalized advice.
Apart from the type of bankruptcy, other factors may also impact the outcome regarding your house. These factors may include the fair market value of your house, the amount of outstanding mortgage, any additional liens against the property, and whether your state allows you to choose between federal and state exemptions.
It’s important to remember that while bankruptcy can provide relief from overwhelming debt, it does have long-lasting consequences. A bankruptcy filing will remain on your credit report for several years and may affect your ability to obtain credit in the future. Moreover, different types of credit, such as mortgages, car loans, or credit cards, may have varying requirements regarding bankruptcy history. Understanding and considering these consequences is essential when making a decision about filing for bankruptcy.
Besides legal considerations, exploring other options to address your debt is also advisable. You could consider debt consolidation, negotiating with your creditors directly, or seeking assistance from a reputable credit counseling service. These alternatives may have their own pros and cons but could potentially help you manage your debt without the need for bankruptcy.
In conclusion, with a debt of $20,000 and a fully paid-off house, filing for bankruptcy can have potential implications on your property, depending on multiple factors, including the type of bankruptcy, exemptions available in your state, and the equity in your house. Seeking guidance from an experienced bankruptcy attorney is crucial to understanding the specific impact of bankruptcy on your situation and exploring other potential solutions for your debt. Remember to consider all consequences before making a decision and ensure you have a comprehensive understanding of the options available to you.
Talk with another lawyer, one that specializes in bk this time. Pretty sure you got bad advice the first go around.
https://www.debt.org/bankruptcy/file-for-bankruptcy-and-keep-house/
You might talk to your current and or mortgage holder about a heloc too if you have a large amount of equity. They should be able to tell you the likelihood of approval with your credit score.
Are you able to get another job? $1800 a month is not much hourly and you will probably just get back in debt. You need to increase your income and pay down debt. $20k is not “bankruptcy” worthy in my opinion.
Where did the debt come from? Do you have a budget?
In the grand scheme of things 20k is not a huge debt load but is going to feel oppressive and be hard to pay off on your salary. Can you rent a few rooms out in your house an pick up a side job?
I have known people who only declared bankruptcy on medical debt and not lost home. Depends on state laws
Nonsense. Talk to another bankruptcy lawyer. It depends what type you file for.
I filed a Chapter 13 and kept my house and car May want to get a 2nd opinion.
20k debt is not worth filing bankruptcy for.
Your lawyer must be talking out of his a$$. There’s homestead exemptions for every state, there’s no reason why you’d have to surrender your home or take equity from it. Contact another attorney
1. Do not file for Bankruptcy over medical debt. Call them and setup a payment plan.
2. Make a budget and start saving an emergency fund.
3. Get a new job. You don’t make enough money.
Call the hospital to see if you can come in and apply for payment assistance,. If you are making less than $30,000 a year it’s free
20K is extremely too little to file bankruptcy if the amount is from medical. Think of it like this, you get sick again and rack up another bill, are you really going to keep filing bankruptcy? 🤔
Maybe get an itemized receipt from the hospital or doctor and set up a payment plan even if it’s only $200 a month. When you get your tax refund put it towards paying that ish off.
A guy posted here that he’s 80k in debt but he’s irresponsible with money. Bankruptcy isn’t going to help him because he’ll go back in debt again.
20k that’s like nothing for debt. Just don’t pay it literally don’t pay it for like a year and call them and work something out. Its better then filling for bankruptcy. Bankruptcy SUCKS you will have a hard time buying a house, car and don’t qualify for other stuff. Its bad like an eviction
DO NOT GET A HELOC TO PAY OFF MEDICAL DEBT. Medical debt is unsecured. Likely this isn’t one $20k bill but dozens of smaller bills. Bills below $500 can’t even be put on credit report.
The unsecured debt most likely will just age out. A HELOC is secured by your house.
Talk to the creditors see if they will reduce the balance in return for it being paid off, look into forgiveness, consider payment plan, or honestly just don’t pay them. Absolutely do not take out a heloc to pay medical debt.
Please listen to everyone saying not to file bankruptcy over medical debt, especially 20k.
If you reach out most will be willing to work with you and/or reduce the debt and payments. Please exhaust all other avenues first before resorting to bankruptcy.
OP, please don’t listen to people giving you advice on how to take out a HELOC or to contact another lawyer.
If you’re in the US (can’t speak on anywhere else) listen to the people recommending you speak with the hospital/creditors about either help with reducing the cost due to your income & also making a payment plan. As long as you’re making the payment, you’ll be ok. I’ve been paying down a small medical debt, I’m on year two of the three it’s going to take, with a manageable payment that’s not messing with my credit.
You have a paid off house and “just” 20k in debt? Sounds like you’re doing just fine with some tight budgeting.
And over time a better paying job.
Dang dude. You are in a blessed position. House paid off?!? That’s usually 45% of people monthly gross expense.
20k is nothing. Did Dave Ramsey a few years ago with 60k debt and making 14/hr with my teacher wife.
You can do this, make a budget every month down to the penny. Call the hospital to get a on a payment plan. You got this dude
All these people talking about bankruptcy, how about you start with your expenses and debts specifically laid out.
Even though your income is low, with not having to pay for a mortgage… you should have money left over after your needs are met.
20k just doesn’t seem like enough to file bankruptcy over. Side gigs, OT, etc could handle that in under 2yrs.
OP has later stated that only $5k is medical debt and the rest is from credit cards due to ill health and living on credit cards.
Find a new attorney, from what i understand homesteads are exempt from bankruptcies
Please don’t just listen to people saying that you can “declare bankruptcy” as to some debts, or that the house is just safe. If you file chapter 7 bankruptcy, all of your debts are part of the bankruptcy and there is a substantial risk that if your state law does not allow you to exempt the full value of the equity you have in the property, that you will lose the house (unless you can work out a deal with the trustee to buy back your equity). $20k in debt is not a large amount of money– perhaps you should consider chapter 13 bankruptcy to propose a plan to payoff the 20k over 5 years and protect the house. $20k over a 5 year plan is around 333 dollars a month (this does not include what you will likely need to pay an attorney). Talk to a bankruptcy attorney that does chapter 13.
My mom just told me that she paid off my delivery recently. I’m almost 40 years old. USA is a crazy place.
20k won’t even buy a decent used car these days. You don’t want to go through bankruptcy.
Contact hospital. Ask for itemized receipt. Then talk to finance department and say you can’t afford it. They will often reduce and/or help you work out a payment plan.