When it comes to bankruptcy, homeowners may have fears as to what will happen to their homes when discharging their debts, especially when they believe their homes do not have much value. In that event, the fear may sometimes hinder California homeowners from filing for Chapter 7 bankruptcy protection. A homeowner is usually assigned a trustee soon after a case is filed.
A home, just like any other asset, must be disclosed when filing for bankruptcy. Other assets include, checking account balances and retirement accounts. To pay off the debt, a trustee on the case will attempt to short sale the home in most situations. The trustee cannot leave a case open for an undetermined amount of time with the hopes of property value increasing. Usually, a case is active for around three to six months.
In regard to an assigned trustee, this is done at the time of filing for bankruptcy. The trustee will attempt to sell unsecured assets to cover debts that are owed. If there is a concern about property value, the trustee is required to state this soon after filing the petition. Typically, a bankruptcy filing is an itemization of ones financial situation at current time. When a home is involved, the case will sometimes stay open a little longer to see if the property value will increase, but not indefinitely.
In the issue of debt, there are many consumers who just simply cannot afford to make timely payments and sometimes cannot pay at all. Once a person’s debt is too much to handle, debt relief may be an option. Usually, filing for Chapter 7 bankruptcy in California is quicker and more efficient for individuals and can lead to discharge of most debts. This can also lead to a fresh financial start for the future.
Source: foxbusiness.com, How Safe is My Home in Chapter 7 Bankruptcy?, Justin Harelik, Aug. 21, 2013