Home Mortgage and Refinancing

When filing bankruptcy in Washington State, debtors should consult a Seattle bankruptcy attorney to assess their situation as to what will happen to a debtors home in a bankruptcy. Washington State Bankruptcy law allows debtors to choose either Federal or State exemptions. The state exemptions allow for debtors to protect up to $125,000 of equity in their home, while the federal exemption can protect considerably less, but allow for greater exemptions on other property. For example, the Federal exemptions allow for the protection of up to about $24,000 in wild card property for joint debtors if there is no home being protected.  Before filing bankruptcy a debtor should consider all of their options with regards to keeping their home as long as they are not over the allowable equity limit in Washington. Here are the options available to debtors:

(1) Keep the house and continue making payments, just as before.
(2) Surrender the house, and generally live there payment free until there is a foreclosure.
(3) Seek modification of one or more of the loans secured by the property.
(4) Sell the property for its current value with the cooperation of the secured creditors. i.e. through a short sale or deed in lieu.

If you are attached to your home and do not want to give it up after filing bankruptcy, you may not have to depending on your circumstances. On the other hand, if you home is under water with negative equity, then you may want to walk away from the home, let it foreclose, and start fresh as you most likely will not be liable for any debt after the foreclosure. A short sale or offering a deed in lieu may be an option where the lender accepts less for the property that what is owed, thus avoiding foreclosure and buying more time to live in the property rent free. As you can see there are different options available for different needs.

If you are considering filing bankruptcy, you should consider speaking to an experienced bankruptcy lawyer, prior to taking action. If you have additional questions please visit our Seattle bankruptcy attorneys homepage to speak to a Washington state bankruptcy attorney.