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What You Need To Know About Exempt Properties When Filing For Bankruptcy

Jan 26, 2008
If you think that filing for bankruptcy is just a piece of cake, think again. Filing for bankruptcy does not really provide a simple escape from all your financial troubles. Note that you still have to pay off some of your debts and obligations. However, the good news is that you will not necessarily lose all your properties to pay off some of your debts. Every bankruptcy case is evaluated separately and the law allows for some exemptions when it comes to property liquidations. The properties that are exempted from liquidation during a bankruptcy proceeding is protected under the law thus your creditors cannot touch these properties. Exemptions do not just apply on the properties that are wholly owned by you but also to equity that you might have on a certain piece of property.

Facing foreclosure is a scary situation for anyone that may have to face it. If you are unable to borrow money from your family and friends, try speaking with your lender. Be sure to tell them honestly what your current situation is, when you will be able to continue your full monthly payments, and what plans you have to get back on your feet. Lenders can be flexible about making payment arrangements, since their money is made on interest and principals associated with the property. It is important to not make agreements with the lender that you know you will not be able to keep, as it may hurt you more in the long run. If you are able to work an arrangement out with your lender, ask for a copy of the new agreement in writing for security purposes.

Another option is to try to refinance your existing loan. You may be able to get a smaller interest rate on a new loan. Be sure to research refinanced loans thoroughly before signing with a company. Hiring a mortgage broker to find the best deals can help to secure a lower interest rate and lower monthly payments. If you are unable to make any other type of arrangement, consider selling the home. This will keep you out of foreclosure status. You may want to hire a Realtor to get the house out on the market quickly and to bring in potential buyers. If you are in need of selling your home quickly, you may want to sell at a smaller price to interest more home buyers.

The protection accorded by the law of exempted properties is not exactly absolute and there are certain points that you need to look into when you apply for these exemptions before and after filing for bankruptcy. Note that the state is given authority under the law to determine what exemptions can be applied to your case. In many cases, the state will allow you to choose which types of exemptions you want to apply in your case. Some of these types of exemptions can be very beneficial to you thus is imperative that you know how to choose the right type of exemptions. To know which types of exemptions are more favorable to you, do some research or better yet talk to a bankruptcy attorney. Always remember that whatever you do during or after filing for bankruptcy can bind you legally.
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