People in New Hampshire may find themselves considering bankruptcy for different reasons. For some people, bankruptcy is the results of medical issues, like cancer. For other people, bankruptcy may be the best option available after their personal debt levels slowly increased over a number of years. What may seem like a minor issue at first can quickly snowball into something unsustainable for you and your income.
If your household income is at or below the state median income for New Hampshire, you will have the option to file Chapter 7 bankruptcy, which offers a discharge instead of requiring a repayment period like Chapter 13 bankruptcy does. However, there are limits on the assets you can own, as well as the income you can earn, when you file for Chapter 7 bankruptcy protections.
The limits on protections for your assets are important to understand. One of the most significant assets in your life is probably your house, and it is normal to worry about whether filing Chapter 7 bankruptcy will it affect the equity you have accrued in your home over the years.
People filing bankruptcy receive a homestead exemption
When you file for bankruptcy, there are certain assets that have protection under New Hampshire law from seizure and sale by the courts. If your assets exceed those exemption amounts, the courts can and will order the sale of certain assets or the liquidation of those assets, including the equity in your home, in order to repay some of your creditors.
One of the exemptions that you will have the option of claiming is a portion of the equity in your house. This is known as the homestead exemption, and it helps protect people from losing their home because of debt. Individuals filing bankruptcy on their own behalf can exempt up to $120,000 in home equity from liquidation in Chapter 7 bankruptcy.
What happens if you have more than $120,000 in equity?
In the event that your personal equity in the home exceeds what you may retain under New Hampshire law, the courts will likely request that you refinance as a way to cash out some of that equity and repay your creditors. That could mean that Chapter 13 bankruptcy is a better option for those with substantial assets.
However, there are certain circumstances, including marriage and properties held in a trust, that are not subject to the same rules as bankruptcy. Many factors will influence what the courts can and cannot do with your home. Sitting down to talk about your financial situation and your interest in Chapter 7 bankruptcy with an experienced bankruptcy attorney can help you make more informed decisions about this important financial issue.