Sometimes life throws a curveball, whether it’s in the form of extensive medical expenses because of an accident or because your company closed and laid everyone off. If you are not able to work because you have to care for a spouse or child who is injured, or because you cannot find a job that pays as much as you made at your old company, you might start to struggle to pay the bills, including your mortgage.
One of the options you have is to file for bankruptcy. However, depending on how you file, that could mean losing your home. That is usually not an option when you are caring for someone, and it’s less than optimal when you are trying to find a job that pays enough to cover the bills. The District of Columbia has homestead exemptions that might allow you to keep your home even when you file bankruptcy.
Chapter 7 & Chapter 13 Bankruptcy
It is harder to keep a home if you file for Chapter 7 liquidation, though it is still possible. If you are able to file Chapter 13 reorganization, you will need enough income to pay your mortgage on time and in full every month. You can usually claim the arrearages as part of the bankruptcy plan and make payments on the amount you are behind. Both types of bankruptcy allow you to have exemptions, including your home, as long as it is your primary residence.
Washington D.C.’s Homestead Exemptions
The District of Columbia has homestead exemptions for bankruptcy, as does the federal government. When you file bankruptcy, you file in federal court, but you are allowed to take your state’s exemptions if your state allows for it. In Washington, D.C., you can choose which exemptions you want, but you cannot take exemptions under D.C. law and federal law – you have to choose one. Federal laws allow for coverage for more types of property than D.C. exemptions. However, if you are only concerned with your primary residence, the District of Columbia’s exemptions are usually enough.
The homestead exemptions allowed under the District of Columbia laws allow you to claim property other than your home under the homestead exemption. For example, it allows you to claim up to $2,575 for one vehicle and up to $8,625 in household goods, in addition to other exemptions.
If you are behind on your mortgage for your primary home, you might be able to keep your home. You can claim the entire value of your home, as long as it is your primary home, in bankruptcy. However, if you purchased your home within 1,215 days of filing bankruptcy, you can claim only $155,675.
Laws change each year, and homestead exemption laws are no different. Always consult an attorney if you have to file bankruptcy to save your home, and always check the amount you are able to claim as an exemption, as well as the number of days you must own your home before you can claim the full value of your home. It may benefit you to hold off filing for bankruptcy until you meet the time threshold, if at all possible. Your bankruptcy attorney will help you make that determination based on your personal circumstances.