Bankruptcy May Protect Your Mesa Home
When you need relief from the burden of debt and a chance to pay off your creditors as means allow, a bankruptcy is one option. A Chapter 13 bankruptcy can help by protecting your assets from creditors while you pay any outstanding debts. The most important of these assets is your home.
Chapter 13 bankruptcy requires you to draw up a plan that shows how you will pay your current and past-due debts. It does not make the debt go away, but rather buys time. This plan will stretch over three to five years. Chapter 13 can prevent the loss of your home and car, even if you’re behind on payments, but you will still have to continue payment on your loans. A Chapter 13 bankruptcy allows you make up any late payments over time and there is no limit as to when you may file. The cost of filing includes two fees, totaling $185 at the time of this writing.
Exploring Bankruptcy, your Home, and the Homestead Exemption
Exemptions protect a certain amount of property and equity from collections. The most valuable exemption is the one that guards your home. This is the homestead exemption. In Mesa, Arizona, the homestead exemption may be claimed for up to $100,000 in equity on your home. This is true for a house, apartment, or mobile home that you physically occupy. If you rent a home, you may claim any prepaid security deposits or rent up to $1,000 or 1.5 times the monthly rent of the place, whichever is less. You may only claim one of these exemptions.
Keep in mind that the homestead exemption applies to equity in your home, not its appraised value. If you’ve taken out a $275,000 mortgage and paid back $50,000 of it, then your home would be exempt. Any equity outside the exemption becomes money you must use under the plan to satisfy your creditors. This may include late loan payments. You will also be required to make your usual monthly loan payments. In addition to your home, there are also exemptions to protect your furniture, food, tools of the trade and your car.
The Affect of Bankruptcy on your Utilities
Utility companies are not allowed to turn off your service due to a declared bankruptcy so your gas and electricity will keep running. The utilities can ask for a deposit to continue service, though. You will also need to pay any bills that are due after your bankruptcy has been filed.
Take note that this page is for informational use only and should not be considered legal advice. If you believe a bankruptcy might be in your future, consult an expert to receive current and correct information. Bankruptcy laws may vary from state to state.
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