Bankruptcy is a legal procedure through which individuals or businesses can discharge their debts under the protection of the bankruptcy court. While filing for bankruptcy can provide debt relief and a fresh financial start, it can also have significant implications on your assets, including your home.
Below, we look at how bankruptcy affects your home ownership and how to sell your house to avoid bankruptcy in Indiana.
Types of Bankruptcy in Indiana
Before considering bankruptcy, it is important to understand the different types of bankruptcy and their specific implications. The most common types of bankruptcy for individuals are Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy involves liquidating your non-exempt assets to pay off your creditors. This means that if you own a home with equity, you may be required to sell it to pay off your debts. However, Indiana has a homestead exemption that allows homeowners to keep up to $19,300 in equity in their primary residence.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves creating a repayment plan to pay off your debts over a period of three to five years. This type of bankruptcy allows you to keep your assets, including your home, as long as you continue to make your scheduled payments.
Can I Keep My Home During Bankruptcy?
Whether or not you can keep your home during bankruptcy depends on the type of bankruptcy you file and the amount of equity you have in your home.
- If you file for Chapter 7 bankruptcy and your home has more equity than the homestead exemption allows, you may be required to sell your home to pay off your debts.
- If you file for Chapter 13 bankruptcy, you can keep your home as long as you continue to make your scheduled payments.
In some cases, you may also be able to strip off a second mortgage or home equity loan, which could lower your overall debt.
Selling Your House to Avoid Bankruptcy
If you are facing bankruptcy and are unable to keep your home, selling your house may be a viable option. One option to consider is a cash home sale.
A cash home sale is a type of real estate transaction in which the buyer pays cash for the property rather than obtaining a mortgage. This type of sale can be beneficial for those looking to sell their home quickly or those who are facing financial difficulties and need to sell their home to avoid bankruptcy.
In a cash home sale, the buyer typically does not require an appraisal or inspection, which can save time and money. Additionally, cash home sales often close quickly, which can alleviate financial stress and uncertainty.
The Benefits of Selling Your Home for Cash
Selling your home for cash can provide several benefits.
- Helps you avoid bankruptcy and the negative impact it can have on your credit score.
- Provides a quick and hassle-free way to sell your home without the need for repairs or renovations.
- Gives you cash in hand, allowing you to pay off debts or invest in other areas of your life.
If you decide to sell your home for cash, there are several steps you can take to sell your home quickly. Work with a reputable cash home buyer who can provide you with a fair and competitive offer. Work with your cash home buyer to close the sale quickly. This may involve providing necessary documentation and working with a title company to transfer ownership.
Is Bankruptcy Right for Me?
Deciding whether to file for bankruptcy or sell your home for cash is a personal decision that depends on your individual circumstances. If you are facing financial difficulties and are unable to keep your home, a cash home sale may provide a quick and viable solution.
Before making any decisions, it is important to consult with a financial advisor or bankruptcy attorney who can help you understand your options and make an informed decision. No matter what path you choose, remember that there is hope for a fresh financial start. With the right support and guidance, you can overcome financial challenges and move forward with confidence.
Sell Your House Fast in Northern Indiana
If you need to sell your house fast but don’t want the hassle of a traditional home sale, contact HouseMart. We buy houses as-is. No repairs are needed. Avoid closing costs and realtor commissions. Close in as little as seven days. Call 219-230-8735 for a fast cash offer from our local home buyers in Indiana.