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Chapter 7 Bankruptcy

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What Homeowners Need to Know About Can I Keep My House If I File Bankruptcy?

Under Chapter 7 or 13, Can I Keep My House If I File Bankruptcy?

Can I keep my house if I file bankruptcy is one of the most common questions homeowners ask when facing overwhelming debt. The answer depends on several factors, like the type of bankruptcy you file, how much equity you have in the property, and whether you’re behind on mortgage payments.

In this article, we’ll break down how bankruptcy affects your home and what you need to know to protect your property.

What Happens to Your House in Bankruptcy?

When you file bankruptcy, your property becomes part of what’s called the bankruptcy estate. But that doesn’t mean you automatically lose your home.

Chapter 7 Bankruptcy and Your House

Often called liquidation bankruptcy, Chapter 7, doesn’t always mean losing everything.

  • If your home equity is within your state’s homestead exemption limits, you can typically keep your house.
  • If your equity exceeds the exemption, the trustee may sell the home to pay creditors.
  • If you’re current on mortgage payments, you’re more likely to keep the home.
  • If you’re behind on your mortgage, Chapter 7 won’t help you catch up and may lead to foreclosure.

Chapter 13 Bankruptcy and Your House

Chapter 13 is a reorganization bankruptcy that allows you to repay debts over 3 to 5 years.

  • You can catch up on past-due mortgage payments through your repayment plan.
  • You must keep making your current mortgage payments on time going forward.
  • As long as you stick to the plan, you can keep your house even if you’re behind.

Understanding which chapter applies to your situation is key to answering can I keep my house if I file bankruptcy.

Factors That Impact Whether You Keep Your Home

Several details affect the outcome when filing bankruptcy as a homeowner:

Equity in Your Home

Each state offers a homestead exemption that protects a certain amount of home equity. If your equity is less than the exemption, your home is usually safe.

Your Mortgage Status

  • Current on payments? More likely to keep your home under either chapter.
  • Behind on payments? Chapter 13 offers a better chance to save your home.

Type of Debt and Overall Finances

If your debt is mostly unsecured (like credit cards), bankruptcy may eliminate enough financial pressure to help you afford mortgage payments again.

Can I Keep My House If I File Bankruptcy and Still Owe Back Payments?

If you’re behind on payments, Chapter 13 is generally your best option. It allows you to repay the arrears over time while keeping your home.

In Chapter 7, however, the lender may proceed with foreclosure once the automatic stay ends, especially if you’re significantly behind.

For advice tailored to your state’s laws and homestead exemptions, consider getting a free evaluation to understand your options clearly.

Get Help Answering “Can I Keep My House If I File Bankruptcy”

Still wondering, can I keep my house if I file bankruptcy? Your situation depends on your equity, payment status, and which chapter you file. The best way to protect your home is to work with professionals who understand bankruptcy law and can guide you through exemptions and filing strategies.

Connect with Bankruptcy Attorneys today for expert help and a free evaluation.

Frequently Asked Questions (FAQs)

Yes, if your equity is within exemption limits and you’re current on payments.

You can keep your home while catching up on missed payments over time.

In Chapter 13, you can repay the arrears. In Chapter 7, the lender may foreclose.

It’s a legal limit that protects a portion of your home’s equity during bankruptcy.

It depends. Filing before may stop the foreclosure temporarily, but the long-term effect depends on your repayment ability and the chapter you file under.

Key Takeaways

  • You can keep your house in bankruptcy depending on your equity and payment status.
  • Chapter 7 may work if your home is within the exemption and payments are current.
  • Chapter 13 allows you to catch up on missed payments and avoid foreclosure.
  • Your state’s homestead exemption is key to protecting your property.
  • A free evaluation can help determine the safest route for your situation.

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