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Can You Keep Your House If You File Bankruptcy? What You Need to Know
Know What to Expect: Can You Keep Your House If You File Bankruptcy Can you keep your house if you
June 27, 2025
Can You Keep Your House If You File Bankruptcy? What You Need to Know
Know What to Expect: Can You Keep Your House If You File Bankruptcy
Can you keep your house if you file bankruptcy? This is one of the most common concerns for homeowners facing overwhelming debt. The good news is that filing for bankruptcy doesn’t automatically mean losing your home. In fact, bankruptcy can sometimes help protect it, depending on your situation.
This guide explains how Chapter 7 and Chapter 13 bankruptcies impact your home, what equity exemptions mean, and how you can protect your property during the process.
Understanding How Bankruptcy Affects Homeownership
Bankruptcy is a legal tool to help individuals deal with debt, but it doesn’t work the same for everyone. Whether or not you can keep your house depends on several factors:
- The type of bankruptcy you file
- The amount of equity in your home
- Whether you’re current on your mortgage
- Your state’s homestead exemption laws
Chapter 7 and Keeping Your House
Chapter 7 is a liquidation bankruptcy. A trustee can sell your non-exempt assets to repay creditors, but that doesn’t mean your home is automatically at risk.
You can keep your house in Chapter 7 if:
- You’re current on mortgage payments
- The equity in your home is fully protected by your state’s exemption
- You continue making payments after the case is discharged
If your equity exceeds the exemption limit, the trustee might sell the property to repay debts. This is why it’s critical to understand your home’s value and exemption limits before filing.
Chapter 13 and Home Protection
Chapter 13 is a reorganization bankruptcy. It allows you to repay debt over 3–5 years through a court-approved plan. This chapter is often used to stop foreclosure and catch up on missed mortgage payments.
You can keep your house in Chapter 13 if:
- You include mortgage arrears in your repayment plan
- You continue making regular monthly payments going forward
- You can afford to complete the plan based on your income and expenses
This option gives homeowners more time and flexibility to keep their property.
What Are Homestead Exemptions and Why Do They Matter?
State and federal laws allow homeowners to protect a portion of their home equity in bankruptcy. This is known as the homestead exemption.
Key Points About Exemptions:
- Each state has its own exemption limits
- Some states let you choose between state and federal exemptions
- If your equity is less than or equal to the exemption, your home is safe in Chapter 7
- In Chapter 13, exemptions affect how much you must repay unsecured creditors, not whether you keep your home
Always check your state’s rules or talk to a bankruptcy professional to understand your protection level.
Other Factors That Affect Keeping Your Home
Even if the exemption covers your equity, there are other conditions to consider.
Are You Behind on Payments?
- Chapter 7 won’t help you catch up
- Chapter 13 lets you repay arrears over time
Is Your Mortgage Affordable Going Forward?
You must be able to afford payments after filing. Bankruptcy removes unsecured debts, which may free up funds for your mortgage.
Are There Other Liens on the Home?
Tax liens, second mortgages, or HELOCs may complicate your ability to keep the home. These debts must be managed in the repayment plan or addressed through lien stripping (in some Chapter 13 cases).
Protecting Your Home During Bankruptcy
If you’re asking, can you keep your house if you file bankruptcy, consider these tips:
- Stay current on mortgage payments if possible
- Review your state’s homestead exemption laws
- Get a home appraisal to understand your equity
- Consult a bankruptcy attorney to avoid surprises
Need Help Keeping Your Home Through Bankruptcy?
Still asking, can you keep your house if you file bankruptcy? The answer depends on your specific financial situation, like your income, mortgage status, and available equity. A bankruptcy professional can help you understand your options, including exemptions and repayment plans.
Connect with Bankruptcy Attorneys to request a free evaluation and receive guidance tailored to your goals.
Protect your home, reduce your stress, and move forward with confidence.
Frequently Asked Questions (FAQs)
1. Can you keep your house if you file bankruptcy and you’re behind on payments?
Yes, in Chapter 13, you can include missed payments in your repayment plan.
2. Will bankruptcy stop foreclosure on my house?
Yes. Filing triggers an automatic stay that stops foreclosure, at least temporarily.
3. What happens to my mortgage after bankruptcy?
You must keep paying it. Bankruptcy doesn’t eliminate secured debt unless you surrender the property.
4. What if my home has more equity than the exemption allows?
In Chapter 7, the trustee may sell it. In Chapter 13, you may need to pay more into your plan to keep it.
5. Can I choose between Chapter 7 and Chapter 13 to protect my home?
Yes, if you qualify for both. Chapter 13 generally offers stronger protection if you’re behind on payments.
Key Takeaways
- You can often keep your house when filing for bankruptcy
- Chapter 7 works best if your equity is protected and you’re current on payments
- Chapter 13 can help you catch up on missed mortgage payments
- Homestead exemptions protect home equity from creditors
- Speak with a legal expert to understand your state’s rules and best options
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