Yesterday on our San Diego bankruptcy law blog, we began discussing some different scenarios homeowners may face when they contemplate filing for bankruptcy protection. We mentioned that not taking any action to find ways to manage one's debt while also trying to find ways to continue to support one's family could cause anyone to lose his or her home to foreclosure. We also discussed that filing for Chapter 7 could also result in San Diego residents losing their homes if their homes have enough equity to pay off other debts.

So can homeowners still keep their homes and other real estate if they believe that filing for bankruptcy protection is their best option to getting their financial situations under control again?

What will happen to your house or other properties if you do file for bankruptcy protection?

Filing for Chapter 7 bankruptcy protection could result in your home being liquidated to pay off other debts. Many individuals still choose this option because it may provide them with more financial freedom and the ability to start over completely.

But you if want to keep your home, you may still be able to do so by filing for Chapter 13 bankruptcy protection. If you file for Chapter 13, you may not be forced to liquidate your assets. Instead, a payment plan may be worked out so that you can continue to pay down your debts, but at a much more reasonable payment amount.

What will happen to your property if you file for bankruptcy after your home has gone into foreclosure?

In some cases, individuals have chosen to wait to file bankruptcy until their home is about to be sold in a foreclosure sale. Individuals view this as an option to buy some time while they try to figure out their finances. If you do the same and your house is in foreclosure, the sale of your house must be stopped. However, this is only a temporary solution to stop foreclosure. A lender may choose to take action to remove the property from your bankruptcy protection so that the sale of the property can proceed.

The answers to some simple questions about bankruptcy and what may happen to one's property during the process are complicated. Fortunately, San Diego residents can seek the assistance of an attorney who will be able to answer their questions about bankruptcy so that they can choose which course of action to take in order to create a fresh start and a better financial future.

Source: Fox Business, "Can Bankruptcy Cause Me to Lose My Homes?" Justin Harelik, Feb. 7, 2012