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Bankruptcy Home Appraisal: 5 Things You Need to Know
Admin • Nov 24, 2021
Many people today declare bankruptcy to restructure their finances and get a new start in life. For instance, the
annual bankruptcy filings
in 2020 totaled 544,463. If you file for bankruptcy as a homeowner, one of your main concerns is likely the fate of your home. A home appraisal gives you a current and accurate home valuation and can help save your home.
Learn more about the bankruptcy home appraisal and the critical role the process plays to protect your home.
What Are Bankruptcy Property Exemptions? A bankruptcy exemption is an essential feature in both Chapter 7 and Chapter 13 bankruptcy. Under bankruptcy law, debtors can retain some property after the bankruptcy proceedings. The property is in a list of items you can keep under federal bankruptcy and state exemptions.
Under Chapter 7 bankruptcy, the exemptions determine how much of your real estate goes towards debt repayment. If you file for Chapter 13 bankruptcy, the exemptions can keep your repayments lower.
What Is a Bankruptcy Home Appraisal? A bankruptcy appraisal is a process a certified appraiser carries out to establish your home's fair market value. After comparing multiple recent house sales in your area, the appraiser gets an opinion of your home's value. The appraisal report also contains factual data to support the value.
Why Does a Bankruptcy Home Appraisal Matter? The bankruptcy home appraisal report plays an essential role in the bankruptcy hearing and can determine whether you retain or lose your home. The report determines equity in your home, which makes all the difference in the bankruptcy hearing. The home appraisal report can get you a lower value than the one from local realtors or the value in the tax-assessed valuation.
The judge in your bankruptcy case scrutinizes every detail in the report. Any errors or inconsistencies can lead to a rejection of the opinion of your home's value. To increase the chances of a favorable judgment in your case, hire an experienced, state-licensed home appraisal professional. The appraiser provides a detailed report with strong evidence to support the quoted value.
How Does Chapter 7 Bankruptcy Protect Your Home? Every bankruptcy case has special provisions. Under Chapter 7 bankruptcy, the trustee considers the equity in the property. Home equity refers to the real estate value after deducting the mortgage and other loans attached to the home.
If your home has little or no equity, the property is exempt from disposal to repay your debt. With equity far above the provided exemptions, your home will likely go up for sale to pay off some of your debt. While Chapter 7 bankruptcy can save your home, you'll still have to continue the mortgage payments. Talk to your lender to create a more flexible schedule to avoid delays in mortgage payments.
How Does Chapter 13 Bankruptcy Protect Your Home? Chapter 13 bankruptcy offers more flexible terms to protect your assets, but the option is expensive. This bankruptcy structure involves a repayment plan with your creditors. Under this bankruptcy plan, you'll pay the value of any nonexempt equity to creditors. The court requires proof of sufficient income to pay the nonexempt equity, monthly house payments, and other debt over three to five years to protect your home.
The decision to file for bankruptcy is often one of the most overwhelming, but this also gives you a chance to reorganize your financial life. If you work with a certified home appraiser, you get crucial advice to determine the best bankruptcy plan.
For the most reliable home appraisals in New York, talk to us at East Coast Appraisal Service. We're New York State-certified residential and commercial appraisers with 30 years of experience in the real estate market.
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