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How to File Bankruptcy and Keep Your House: What You Need to Know
How to File Bankruptcy and Keep Your House in Certain Situations If you’re dealing with overwhelming debt, you may be
September 25, 2025
How to File Bankruptcy and Keep Your House: What You Need to Know
How to File Bankruptcy and Keep Your House in Certain Situations
If you’re dealing with overwhelming debt, you may be wondering how to file bankruptcy and keep your house at the same time. Many homeowners worry that filing will automatically lead to foreclosure, but that’s not always true.
Whether you file Chapter 7 or Chapter 13, there are legal strategies that may help address debt while allowing some homeowners to retain their homes.
How Bankruptcy Protects Your Home
The Automatic Stay
The first benefit of filing bankruptcy is the automatic stay—a legal order that generally pauses collection activity, including foreclosure proceedings. From the moment you file, mortgage lenders must pause their efforts to repossess your home.
This may provide time to reorganize finances or address missed payments, depending on the circumstances.
Exemptions That Protect Equity
A major part of how to file bankruptcy and keep your house depends on state or federal homestead exemptions. These exemptions may allow protection of a portion of home equity, depending on applicable limits.
For example:
- If your state allows a $75,000 exemption and your equity is under that amount, your home may qualify for exemption protection in Chapter 7.
- In Chapter 13, exemptions help structure your repayment plan while allowing you to keep your home.
Your Mortgage Still Matters
Bankruptcy doesn’t erase your mortgage—it only affects your obligation to pay unsecured debts. If you’re behind on mortgage payments, Chapter 13 may provide a structured repayment process for past-due amounts.
If you’re current on payments and your equity is protected, Chapter 7 may allow you to seek discharge of certain unsecured debts while continuing mortgage obligations.
Choosing the Right Bankruptcy Chapter
Chapter 7 and Homeownership
Chapter 7 is often called “liquidation bankruptcy.” If you have little equity or can fully protect it with exemptions, you may be able to keep your house, but you must stay current on your mortgage. If you’re behind on payments and can’t catch up, you risk losing the home even under Chapter 7.
Chapter 13 and Repayment Plans
Chapter 13 may be ideal if you’re behind on your mortgage. It creates a 3–5 year repayment plan, allowing you to address past-due payments while foreclosure proceedings are pending.
This chapter is especially helpful for:
- Homeowners with steady income
- Those who have non-exempt equity
- People who want to protect co-signers or avoid losing other property
How to File Bankruptcy and Understand Options for Keeping Your House
To increase your chances of keeping your home during bankruptcy, follow these key steps:
- Know your home equity: Get a recent appraisal and check your mortgage balance.
- Understand your exemptions: Each state sets limits for homestead protection.
- Choose the right chapter: Work with a bankruptcy attorney to determine whether Chapter 7 or 13 fits your needs.
- Stay current on mortgage payments: Especially during Chapter 7, staying up to date is critical.
- File with care: Filing at the right time may affect foreclosure timing and asset treatment.
How to File Bankruptcy and Keep Your House the Right Way
Knowing how to file bankruptcy and keep your house can make all the difference in your financial recovery. With the right exemptions, legal timing, and guidance, some homeowners may be able to discharge certain debts or create a payment plan while addressing homeownership concerns.
Get Help with How to File Bankruptcy and Keep Your House
Still wondering how to file bankruptcy and keep your house in your situation? The team at Bankruptcy Attorneys can help you understand your home equity, exemptions, and repayment options. Get a free evaluation today to learn how bankruptcy may affect your home and overall financial situation.
Frequently Asked Questions (FAQs)
1. Will I automatically lose my house if I file bankruptcy?
No. In many cases, bankruptcy laws allow you to keep your home through exemptions or payment plans.
2. Can Chapter 7 help me keep my house?
Yes, if your equity is protected and you’re current on your mortgage, Chapter 7 may work for you.
3. What if I’m behind on my mortgage?
Chapter 13 lets you repay past-due mortgage payments over time, which may prevent foreclosure.
4. Do I need to reaffirm my mortgage in Chapter 7?
Possibly. A reaffirmation agreement allows you to continue paying and keeping your mortgage after discharge.
5. How do homestead exemptions work?
Homestead exemptions protect a certain amount of equity in your home during bankruptcy, which helps you keep your property.
Key Takeaways
- Bankruptcy may help you keep your house if exemptions cover your equity.
- Chapter 7 works best for homeowners who are current on payments.
- Chapter 13 helps catch up on missed mortgage payments over time.
- The automatic stay stops foreclosure while your case is reviewed.
- Legal guidance ensures you file the right chapter for your situation.
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