During the personal insolvency process, your assets are sold, and these funds are used to pay back a portion of your debts to your creditors. Although declaring bankruptcy may provide you with the fresh financial start that you need, you may be very concerned about what will happen to some of your assets, especially the home that you live in.
Whether or not you are able to keep your home during the personal insolvency process typically depends on how much equity you have in it. You can calculate your home’s equity by taking the value of your home and subtracting your mortgage and property taxes from this amount. If your home has little to no equity in it, you may be able to keep it after you file for bankruptcy.
However, if your house has a substantial amount of equity in it, your house will either be sold or repossessed. Although this may seem like the worst possible scenario, there are certain strategies you can use to rebuild this equity and remain living in your home. For example, you may be able to borrow funds from friends or family members. Or, you may be able to get a second mortgage and re-purchase the equity you previously had in your home.
It is important to keep in mind that the rules regarding homes and personal insolvency are complicated and differ in how they will apply in each individual situation. If you want to know more about what will happen to your home if you choose to file for bankruptcy, contact us at Morgan & Partners Inc.