In a Chapter 7 Bankruptcy, also known as the straight liquidation bankruptcy, a debtor is seeking relief under the bankruptcy code to extinguish all dischargeable debts. Many debtors qualify for this type of relief. However, what happens if you are a homeowner? Will you have to give up your home in a Chapter 7 bankruptcy? The answer is, not necessarily. In the state of Nebraska a person can have up to $60,000 in equity in their home before the trustee will even consider selling the home for the benefit of your creditors.
When a trustee reviews your estate (property & assets) the trustee is trying to find property and assets that are not protected by the law to liquidate (sell) for the benefit of your creditors. These sales can be costly. The trustee will need to be paid a fee, there is a fee for the sale itself, and then the proceeds will first be used to pay any and all mortgages and outstanding liens on the home, such as tax liens. After considering all of these factors, the trustee may conclude that after the time, effort, and cost of selling the home, there would not be enough money left over to distribute to your creditors.
If you live in Iowa and your home is on one-half acre in town or 40 acres or less out of town, your entire property may be exempt regardless of the amount of equity or the value of the home. However, there are a few specific circumstances where this exemption may not apply making it important for you to contact an experienced attorney when considering filing for bankruptcy.
Contact our office so we can evaluate your situation and advise you on the best way to protect your assets. Bankruptcy may not be the right choice for you at this time and we can advise you on how to best handle your situation.