It depends. If your mortgage payments are current and you can prove to the bankruptcy judge that you are likely to continue making your payments then the court may allow you to keep your home. However, if you have considerably more equity than that which is protected by the state homestead exemption then you may be forced to sell the property because the equity that is in excess of the homestead exemption is considered an asset which creditors may be entitled to recover from during bankruptcy.
In any case, Alabama law allows an exemption of $5,000 per owner on property that is used as a primary residence and is 160 acres or less in size. That means that the creditors whose loans are not secured by the property cannot touch that portion of equity if the owner(s) equity in their home. In order to qualify for this homestead exemption, the property owners must record a homestead declaration in the same manner that all other property records are recorded.
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This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified foreclosure and alternatives lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local foreclosure and alternatives attorney to discuss your specific legal situation.