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Will I Lose My House If I File Bankruptcy? What Homeowners Should Know
Will I Lose My House If I File Bankruptcy Under Chapter 7 or 13? Will I lose my house if
September 30, 2025
Will I Lose My House If I File Bankruptcy? What Homeowners Should Know
Will I Lose My House If I File Bankruptcy Under Chapter 7 or 13?
Will I lose my house if I file bankruptcy? This is one of the most common concerns for homeowners facing financial hardship. While bankruptcy does carry risks, many people do not lose their homes when filing, especially if they understand how exemptions and repayment plans work.
Whether you’re filing Chapter 7 or Chapter 13, your home may be protected if you follow the right legal process.
Understanding Home Protection in Bankruptcy
The Automatic Stay
When you file for bankruptcy, the court issues an automatic stay—a legal order that immediately stops foreclosure, collection calls, and lawsuits. This gives you breathing room to assess your options and prepare your next steps.
Homestead Exemptions
Every state (and federal law) provides a homestead exemption, which protects a certain amount of home equity from creditors. If your equity is within the exemption limit, your house is typically safe from liquidation in Chapter 7.
Examples:
- Federal exemption (2025): ~$27,900
- California: $300,000 to $600,000 depending on location
- Texas: Unlimited exemption for primary residences
If you’re asking “will I lose my house if I file bankruptcy,” the first step is calculating your home’s equity and comparing it to the available exemption.
Will I Lose My House If I File Bankruptcy with a Mortgage?
Chapter 7 Bankruptcy
In Chapter 7, also called liquidation bankruptcy:
- You must be current on your mortgage to keep the home.
- Your equity must be fully protected by the exemption.
- If your home has non-exempt equity, the trustee may sell it to repay creditors.
Chapter 13 Bankruptcy
In Chapter 13, you create a 3- to 5-year repayment plan:
- You can catch up on missed mortgage payments over time.
- Your home is protected as long as you make scheduled payments.
- Exemptions still apply, but don’t require liquidation.
If you’re behind on payments and want to save your home, Chapter 13 is often the better route.
What Could Cause You to Lose Your House in Bankruptcy?
Even if protections are available, certain factors may still put your home at risk:
- High home equity beyond the exemption limit (Chapter 7)
- Falling behind on mortgage payments after filing
- Failure to complete the repayment plan (Chapter 13)
- Non-primary residences that may not qualify for full exemption
This is why it’s essential to assess your financial picture before filing and to ask, honestly, “Will I lose my house if I file bankruptcy under these conditions?”
Will I Lose My House If I File Bankruptcy? Here’s the Bottom Line
Will I lose my house if I file bankruptcy? Not necessarily. If your equity is exempt and your mortgage is current, you may be able to keep your home. Chapter 13 offers even more protection for homeowners who’ve fallen behind. Understanding your options and exemptions is key to making the right decision.
Get Help with “Will I Lose My House If I File Bankruptcy”
Still unsure whether you’ll keep your home? The team at Bankruptcy Attorneys can help you understand exemptions, evaluate your mortgage status, and choose the right filing strategy. Get a free evaluation today to protect your home and your financial future.
Frequently Asked Questions (FAQs)
1. Can bankruptcy stop foreclosure on my house?
Yes. Filing triggers an automatic stay that halts foreclosure while your case is reviewed.
2. What happens if my home has non-exempt equity?
In Chapter 7, the trustee may sell the home. In Chapter 13, you can repay the non-exempt portion through your plan and keep the property.
3. Can I include mortgage arrears in bankruptcy?
Yes. Chapter 13 allows you to catch up on past-due mortgage payments over time.
4. Will bankruptcy remove a second mortgage?
4. Will bankruptcy remove a second mortgage?
Possibly. In Chapter 13, if your home’s value is less than the first mortgage, a second mortgage may be stripped as unsecured debt.
5. Can I file bankruptcy and keep an investment property?
Investment properties may not be protected under homestead exemptions and are more likely to be liquidated in Chapter 7.
Key Takeaways
- Filing bankruptcy does not automatically mean losing your home.
- Homestead exemptions protect home equity within certain limits.
- Chapter 13 allows repayment of missed mortgage payments to prevent foreclosure.
- An automatic stay stops foreclosure while the case is active.
- Legal guidance can help protect your home and your financial recovery.
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