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Most states allow homeowners that file for bankruptcy to protect their homes through the homestead exemption.  The homestead exemption works in Chapter 7 bankruptcy by allowing a homeowner that files for bankruptcy to protect the equity in their home.  The homestead exemption works in Chapter 13 bankruptcy as well.  In Chapter 13 bankruptcy, the amount that you owe to unsecured creditors is reduced if your home equity (or most of it) is exempt.  This ultimately makes it easier to make payments in the repayment plan.  Connecticut has homestead exemption laws that differ from some other states’.

In the state of Connecticut, up to $75,000 of home equity can be protected in the homestead exemption.  In some cases, the homestead exemption could be even higher.  For example, if you are protecting your home against a hospital bill, the homestead exemption can be up to $125,000.  If you are married and you and your spouse decided to file for joint bankruptcy, you could be entitled to even more protection.  The state of Connecticut allows joint bankruptcy filers that are married to double their homestead exemptions.  However, this is only possible if you and your spouse are joint owners of the property in question.

In Connecticut, homestead exemptions can apply to homes, mobile homes, condominiums, or any other real property.  However, property can only be protected through the homestead exemption if it is your primary residence.  In Connecticut, you can choose to use the federal bankruptcy exemption system or the state exemption system.  However, you must pick one or the other.  You cannot pick and choose from both categories to suit your needs.  In contrast to Connecticut’s homestead exemption, the federal homestead exemption amount is only $21,625.  If protecting your home is a priority, you might want to consider using the Connecticut exemption system so that you will be entitled to Connecticut’s homestead exemption.

If you decide to use Connecticut’s homestead exemption, there is no application process.  You will receive this automaticall or texty when you file for bankruptcy.  You should take this and the fact that you can get much more money from Connecticut’s homestead exemption than the federal one into consideration when you apply for bankruptcy.  If protecting your property is a necessity during bankruptcy, you should use Connecticut’s homestead exemption.  For more information concerning the homestead exemption, or to discuss your bankruptcy case with a professional, you can contact me.  I am an experienced bankruptcy lawyer and I offer free consultations!  To make an appointment, click here.