Bankruptcy can be a powerful tool for those with too much debt, but many people don’t take advantage of bankruptcy protections. Frightening rumors about the consequences of bankruptcy can prevent people from filing when it would be a good decision.
One of the most persistent myths about Chapter 7 or liquidation bankruptcy is the idea that it forces the sale of all of your valuable assets. In theory, that is what the word liquidation refers to. The requirement to sell off or liquidate certain assets prevents people with substantial property from abusing the bankruptcy process.
Although you may need to sell some property to secure a discharge in a New Hampshire Chapter 7 bankruptcy filing, you can exempt or protect some of your property from that process. Protecting your equity in your home is likely one of your biggest concerns.
New Hampshire has a generous homestead exemption
Bankruptcy proceedings should help someone take control of their debt by ending collection activity and discharging certain unsecured debts. Completely stripping someone of all of the assets they have acquired throughout their lives would likely achieve the opposite effect.
Those filing for bankruptcy can protect or exempt certain property from liquidation by the trustee overseeing their case. A single person can protect up to $120,000 in home equity when filing a Chapter 7 bankruptcy in New Hampshire. State law permits couples filing a joint bankruptcy to double that exemption amount and protect up to $240,000 in home equity.
What if you have more equity than that?
If you have more than the exemptable amount of home equity accrued in your home, you may need to think about what kind of bankruptcy would be best for your situation. Depending on your other assets and the total amount of your debts, a Chapter 7 bankruptcy may still be the best option.
For those with substantial assets that they might lose, a Chapter 13 bankruptcy could be the better option. If the total equity is below the homestead exemption amount or if the total unsecured debts you have far exceed what equity you might lose, a Chapter 7 filing may still be the better choice.
Learning more about Chapter 7 bankruptcy can help you take control over your financial circumstances.