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Will I Lose My Home If I File Bankruptcy?

Posted in: Bankruptcy

As part of debt relief, anyone considering bankruptcy usually has this question: Will I lose my home? Generally, you can save your home if you file for Chapter 7 or Chapter 13 bankruptcy. However, how to handle your home during bankruptcy is a complex question, and every case is different. 

If you feel crushed by debt and are thinking about declaring bankruptcy, speak to an attorney immediately. With a Debt Pros bankruptcy attorney at your side from Wonais Law, filing for bankruptcy could be the solution to your financial problems. 

Contact us today to assist with your bankruptcy case and protect your home from creditors.

Money Stacked On A Table With Digital Graph With An Arrow Pointing Upwards

What Is Chapter 7 Bankruptcy? 

Chapter 7 bankruptcy is the most common type of bankruptcy. A Chapter 7 bankruptcy filing also may be referred to as a liquidation case. When you file for Chapter 7 bankruptcy, the petition creates an automatic stay that usually prevents debt collectors from making further collection efforts while the case proceeds. 

In Illinois, you are entitled to keep certain property that qualifies for various bankruptcy exemptions under state law. Some of the most commonly used bankruptcy exemptions in Illinois are: 

  • Your personal home, with $15,000 in equity protected from creditors ($30,000 if your spouse is also filing). 
  • $15,000 of compensation for a personal injury lawsuit. 
  • Auto equity up to $2,400 for each owner
  • Books and tools used in your profession up to $1,500
  • $4,000 in additional personal property, such as cash in the bank

If you are on time with your mortgage payments, you can keep your home after a Chapter 7 bankruptcy. 

What Is Chapter 13 Bankruptcy? 

In a Chapter 13 bankruptcy, you don’t need to liquidate your assets to pay off creditors. Instead, you create a repayment plan to repay some or all of your debts over several years. This process may allow you to keep much of your property, including your home. 

The repayment plan period is three years if your family’s monthly income is under the Illinois median income for a family of your size. The repayment period is five years in other cases. 

Qualifying for Chapter 13 bankruptcy means having regular income and meeting debt limitation requirements. The limit is $383,175 for unsecured debt and $1,149,525 for secured debt. 

Filing Chapter 13 bankruptcy protection can be preferable because you may qualify for more of your home equity to be protected from creditors. You also may be able to create a repayment plan to catch up on your delinquent mortgage payments. 

Illinois Homestead Exemption 

The Illinois homestead exemption is the key when protecting your house in bankruptcy. The homestead exemption protects some of the equity of your home. In Illinois, you may be exempt as much as $15,000 of equity in your home. If you file bankruptcy with your spouse, up to $30,000 of equity is protected. 

The homestead exemption also protects the sale proceeds for up to a year. You could qualify for more equity being protected in bankruptcy if the residence is held as tenants by the entirety and only one spouse files for Chapter 7 or 13 bankruptcy. 

Unfortunately, despite the high cost of living in Chicago, the homestead exemption in Illinois is still low. You can only use the state exemption because the federal exemptions aren’t valid in Illinois. However, a bankruptcy attorney can work with you to increase the chances of keeping your home. 

Suppose your home is worth $100,000. Your mortgage is for $90,000, so you have $10,000 in equity. In this scenario, your equity would be exempt with the homestead exemption when you file bankruptcy. Creditors cannot seize your equity, and you can keep your house, assuming you make on-time payments and pay taxes. You don’t need to file a homestead application to use the exemption in bankruptcy.

Person Signing Papers

Reaffirming Your Mortgage 

One strategy that can help you keep your house is to reaffirm your mortgage when declaring Chapter 7 and continuing to make every mortgage payment. You can reaffirm your mortgage if you are current on your payments and have less than $15,000 in equity ($30,000 if married). This means you agree to continue mortgage payments despite declaring bankruptcy. If you decide to reaffirm your mortgage, you are still obligated for the debt, even if financial circumstances change and later you can’t afford it. 

File Chapter 13 to Save Your House

Another option is to file Chapter 13 bankruptcy to protect your home. This may be the right choice if you must catch up on your home loan payments. Filing Chapter 13 allows you to avoid foreclosure and propose a repayment plan to catch up on your mortgage payments. You also could qualify to protect additional home equity. 

Even if the mortgage company has already started foreclosure proceedings, it isn’t necessarily too late to use Chapter 13 to save your home. The foreclosure process is suspended as soon as your bankruptcy attorney files your Chapter 13 bankruptcy petition. This is usually the best option if you are behind on your mortgage payments and want to keep the house. 

Generally, you can save your home when filing a bankruptcy case in Illinois. However, some of your home equity could be exposed to creditors, and you will need to create a payment plan if you are behind on your home loan. A bankruptcy attorney in Chicago can review your case and explain the legal strategies that could help keep your home after filing bankruptcy. 

Contact Our Chicago Bankruptcy Attorneys Today for Your Bankruptcy Case

If you are experiencing financial problems, you probably consider filing for bankruptcy. But losing your home in bankruptcy is a common concern, but you won’t necessarily lose it. You can often keep your home if you file for bankruptcy. Many debtors can also keep most of their possessions. 

You should have a free consultation with a bankruptcy attorney to get all your questions answered about unsecured creditors, mortgage debt, and more. The bankruptcy lawyers at Wonais Law Firm are here to help if you are facing debt problems or considering bankruptcy. Contact a Chapter 7 and Chapter 13 bankruptcy attorney today for more information. They can assist you with filing for Chapter 7 or 13 bankruptcy. 
Attorney John Wonais is an experienced bankruptcy attorney who has achieved a stellar 10.0 rating by Justia and has been named a Rising Star by Super Lawyers. For legal assistance, contact our Chicago bankruptcy attorney at (312) 883-5422.

Client Testimonials

What Our Clients Say

I want to start by saying THANK YOU! John was patient, prompt, informative and easy to work with. In our time of need, he helped my parents file for bankruptcy successfully and at a great price. If you are ever in the need of any services concerning your debt and potential bankruptcy litigation, I give my word and experience that John is the BEST in the Chicagoland area.

- Eric McDowell

John was outstanding in the process of my chapter 7. Not only did he keep me abreast of every step and matter that involved my BK but he was reasonable with the price and the time I had to pay him. He sent me places that accepted my Bk when it came to getting a new car as well and his communication was an A+. There was never a time I couldn’t reach him and if he missed my call he would proceed to call back before the day over or early the next day. I recommend him to any and everyone!

- Lamar Johnson

John is a great lawyer to work with. It’s easy to be honest and share things with him. It felt good to communicate with him. When I reach out to him, he is very good at answering the phone or responding when he can. I recommend his work as well. He’s very organized and gets things done. Thank you John.

- JP W

This guy made my experience so smooth I would recommend him to anyone who is thinking about filing for bankruptcy. He is very patient with his clients and Is very informative. Every question I had he answered even if I asked it twice. Highly recommend!!!!!!

- Nikita Nichols

John is very patient, he’s worked with me from start to finish. Always answer my questions and never made me feel like I’m a bother. Never made me feel like I’m a number in his book. He’s very helpful and caring which is why I’d recommend him over any bankruptcy lawyer. Thanks John for all you do.

- Corey Ross

Thank you team DebtPros! The choice to file was not easy, but it was the best decision for my family. John, I appreciate your kindness, thoroughness, and professionalism. I feel like you’ve guided me through this process in a very personable way. Thank you for always being available to chat, and making the experience so efficient and understanding. I can see the silver lining toward a fresh start! Thank you again & Have a wonderful summer. Sincerely, SB.

- Shelly Boyki

I am honored to provide such a financial relief feedback for this amazing blessing whose name is Atty. Wonais. There is so much I could share endlessly about his superb knowledge and service that he offered me as his client. However, I will share what I found to be essential in my financial issues that Atty. Wonais selflessly provided to me as his client; his expertise, his ability of trustworthiness was "everything" oh my goodness he is truly trusting thru the entire process.

- Val B.

I was referred to them, and this has been the best decision I have ever made. I never been this confident in a person like I am with John. He heard my needs and wants, he made it possible to give me that. Excellent customer service. He put all my options on table to fit my needs. He never sugarcoat he gives it to you like it is meaning he’s not rude or unprofessional. He’s that person that tells you what you need and bot what you want. I have referred all my friends and family to his service.

- Nicole Murray

So one night I went online looking for advice on google and John came up and I called him on the weekend late evening and he happened to answered which was awesome. John helped me out with my situation he gave me amazing advice and options on how to take on my problems the right way. John is super easy to talk to Very informative and he answered all my questions.

- Freddy

This office and staff was amazing. I was referred to John from my best friend and as soon as I reached out he was very prompt on getting back to me and helping. From start to finish the process was amazing stress free and straight forward. He stayed in communication no matter what time of the day. If I had a question he had the answer. His tips and tricks and knowledge helped me a lot and made me more comfortable and excited about starting over.

- Kierra Smith

John took me on as a client with no problem. He was very understanding, passionate, helpful and available every step of the way. Trust me I am a very happy client, I definitely recommend John.

- Jessica Burton

John did a wonderful and seamless job with my case-he handled everything properly and was very timely in all of his communication. He is professional and reliable. I would highly recommend him to anyone who may have to deal with a bankruptcy. Five stars!

- Ashley I.

I had a great experience with Wonais Law, LLC. John is very patient and replies right away to any questions or concerns that you have. I would recommend his services to anyone.

- Erika Sing

If I can leave more stars I will. Wonaia Law is highly recommended. John is great with making sure I understand everything that was going on, I really appreciate how he’s always there to answer any questions I have ... My chapter 7 is just about over and I have 2nd chance with living life debt free.

- Tiffany Austin

John Wonais is responsive, professional, and cares for his clients. He is extremely experienced in civil litigation and has answered all of my questions in a way that I can understand as someone with zero experience in law. He has gone above and beyond and has always made sure to follow up with me when I’ve needed it. I truly feel that he has my best interest at heart.

- Ariana Khosravani

I really wanna give a big thanks to John he helped me out a lot. He walked me through everything to make sure I understand, good quality. I don’t think I could of did it without him ?

- Twona Gibson

He gave an expert and advise and a great service. He went all out to be sure I got a solution to the issue I had.

- Betty Salami

I want to thank John for helping me win my case he was very helpful throughout the process and very professional, thanks again.

- Diana M.

I was very impressed on how quickly I was responded to, and how my lawyer John made everything so easy for me to understand. I have never had to hire a lawyer before, and I'm really glad that I met such a professional, and honest person. I would highly recommended.

- Angela Mata

DebtPros is a law firm that specializes in consumer bankruptcy. John has years of valuable experience and is dedicated to helping clients file for bankruptcy. John is responsive and provides a free consultation to prospective clients. I recommend this firm to anyone who is considering filing for bankruptcy.

- Taylor Kosla

John Wonais provided me with timely and beneficial legal counsel. I would trust his firm to represent me in any creditor-related case. John's professionalism and expertise are second-to-none; highly recommend his services.

- Richard Young

Very helpful, professional and they’re reasonably priced.

- Anthony Brown

Great Professional Service- I have been working with Wonais Law the past couple weeks and I have been blown away from their attention to detail and professionalism. They get work done quickly and are extremely responsive. I would recommend this firm to everyone needing legal services.

- Andres Jara

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