Filing for bankruptcy can feel overwhelming, especially when you’re worried about whether you can keep your home. Many people hesitate to file because they assume bankruptcy automatically means giving up their house. The good news is, in many cases, you can keep your home during bankruptcy—but it depends on several key factors.
How Bankruptcy Affects Your Home
When you file for bankruptcy, all your property becomes part of the bankruptcy estate. This includes your house, car, personal belongings, and financial accounts. However, both state and federal laws provide exemptions that protect certain types of property from being sold to pay creditors.
The Oklahoma Homestead Exemption
Oklahoma has one of the most generous homestead exemptions in the country. Under 31 O.S. § 1(A)(1), your primary residence is fully safe during bankruptcy, no matter how much equity you have, as long as:
- The property does not exceed one acre in a city or town; or
- The property does not exceed 160 acres if it is rural.
This means that in most cases, courts cannot take your home to pay unsecured debts like credit cards or medical bills.
Keeping Your Home in Chapter 7 Bankruptcy
Chapter 7 bankruptcy helps wipe out most unsecured debts quickly. Whether you keep your home in Chapter 7 depends on:
- Your mortgage payments – You must stay current on your mortgage.
- Your equity – If your equity is fully protected by the Oklahoma homestead exemption, your house is safe.
If you are behind on your mortgage, Chapter 7 may not stop foreclosure permanently, but it can temporarily delay it.
Keeping Your Home in Chapter 13 Bankruptcy
Chapter 13 bankruptcy works differently because it involves creating a repayment plan over three to five years. Benefits of Chapter 13 include:
- Catch up on mortgage arrears – You can pay back overdue mortgage payments through the repayment plan.
- Keep your home even if behind – As long as you keep up with your Chapter 13 plan and future mortgage payments, you can avoid foreclosure.
Should You Talk to a Bankruptcy Attorney?
Bankruptcy laws are complex, and the outcome can vary based on your financial situation and the type of bankruptcy you file. An experienced attorney can:
- Determine whether your home qualifies for protection under Oklahoma law.
- Advise whether Chapter 7 or Chapter 13 is best for your situation.
- Help you develop a plan to keep your home and manage your debt.
Claremore Bankruptcy Attorneys
Filing for bankruptcy in Oklahoma doesn’t automatically mean losing your home. With the state’s strong homestead exemption and proper bankruptcy planning, many people keep their house while eliminating other debts. If you’re filing or considering filing bankruptcy, call us at Claremore Attorneys by calling 918-379-4872 or online for a consultation.