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Can You File Bankruptcy and Keep Your House? Here’s the Truth
Can You File Bankruptcy and Keep Your House: Key Questions Answered If you’re considering bankruptcy, one of the biggest concerns
June 11, 2025
Can You File Bankruptcy and Keep Your House? Here’s the Truth
Can You File Bankruptcy and Keep Your House: Key Questions Answered
If you’re considering bankruptcy, one of the biggest concerns is: can you file bankruptcy and keep your house? The short answer is that it may be possible, but several factors come into play. From exemption laws to the type of bankruptcy you file, protecting your home during bankruptcy requires planning, legal knowledge, and financial clarity.
This guide will explain when you can keep your home, how Chapter 7 and Chapter 13 work, and what you can do to safeguard your property through the process.
How Chapter 7 Bankruptcy Affects Your Home
Chapter 7 bankruptcy, often called “liquidation bankruptcy,” is designed to wipe out unsecured debts like credit cards and medical bills. But it may involve selling non-exempt assets to repay creditors. So, can you file bankruptcy and keep your house under Chapter 7?
It Depends on Equity and Exemptions
To keep your house in Chapter 7:
- Your home equity must fall under your state’s homestead exemption
- You must be current on your mortgage payments
- You must continue making future payments to avoid foreclosure
For example, if your home is worth $250,000, you owe $240,000, and your state exempts $25,000, you may be able to keep your home. But if you have too much equity, the bankruptcy trustee may sell the house to pay creditors.
Learn more about this process here:
How Do I File for Chapter 7 Bankruptcy?
Can You File Bankruptcy and Keep Your House in Chapter 13?
Chapter 13 bankruptcy is structured to help you reorganize debt and make affordable payments over three to five years. Chapter 13 often allows homeowners to keep their house, even if they’re behind on payments, depending on the circumstances.
Why Chapter 13 Helps Protect Your Home
This form of bankruptcy:
- Stops foreclosure immediately with an automatic stay
- May allow you to catch up on missed mortgage payments over time
- Allows you to retain property, even if equity exceeds exemption limits
Your mortgage remains in place, but your plan includes repayment terms that allow you to save your home. It may be an option for homeowners at risk of foreclosure, depending on individual circumstances.
More details here:
How Do I File Chapter 13 Bankruptcy?
Factors That Determine If You Can Keep Your Home
The answer to can you file bankruptcy and keep your house depends on several factors:
- Mortgage status: Are you current, or have you missed payments?
- Home equity: Does it fall within state exemption limits?
- State law: Some states have generous homestead exemptions; others do not.
- Type of bankruptcy: Chapter 13 offers more flexibility for homeowners.
If you’re still unsure how these apply to your case, a Free Evaluation could help you understand your options.
Understanding Homestead Exemptions by State
Each state has its own homestead exemption, which protects a portion of your home’s equity. Here are examples:
- California: Up to $678,391 (based on county median home value)
- Texas: Unlimited exemption for primary residences
- Florida: Unlimited exemption, with acreage caps
If you’ve lived in your home for less than 1,215 days, federal exemption caps may apply. You can check state-specific protections here:
State Bankruptcy Resources
How to Increase the Chances of Keeping Your House
To better understand factors that may affect whether you can keep your home, consider the following:
- Stay current on your mortgage if possible
- Avoid taking out second mortgages or HELOCs before filing
- Keep accurate documentation of your mortgage and equity
- Work with a bankruptcy expert to understand your best options
Need professional help? Explore support through:
Protect Your Home While Filing for Bankruptcy
While filing for bankruptcy can be intimidating, many people are able to explore options to protect their homes by understanding their options and planning carefully. Whether you choose Chapter 7 or Chapter 13, the key is knowing how exemptions apply and what you need to do to remain in good standing with your mortgage.
If you’re wondering can you file bankruptcy and keep your house, the answer is that it may be possible in many cases, depending on the circumstances.
Get Help with Bankruptcy and Protecting Your Home
Don’t face bankruptcy or the risk of foreclosure on your own. Filing can be complex, and your home is far too valuable to leave unprotected. Legal guidance can help you understand your options if you’re trying to address foreclosure concerns or plan ahead.
Through BankruptcyAttorneys.net, you can connect with experienced bankruptcy attorneys who understand how to protect your home, navigate exemptions, and build a plan that fits your financial goals.
Take the next step today to learn more about your legal options.
Frequently Asked Questions (FAQs)
1. Can you file bankruptcy and keep your house if you're behind on payments?
Yes, Chapter 13 lets you catch up on mortgage arrears over time through a repayment plan.
2. What happens to your house in Chapter 7 bankruptcy?
If your home equity is within the exemption limit and you’re current on payments, you may keep your house.
3. Do I need to reaffirm my mortgage during bankruptcy?
In Chapter 7, reaffirmation may be required to keep your home and continue paying the mortgage.
4. Can bankruptcy remove a second mortgage?
In some Chapter 13 cases, a second mortgage can be removed if the home’s value is less than the first mortgage balance.
5. Will bankruptcy affect my ability to refinance?
Yes, but many lenders work with post-bankruptcy filers after a waiting period of 1–4 years.
Key Takeaways
- You can file bankruptcy and keep your house in many cases.
- Chapter 13 is ideal for catching up on missed mortgage payments.
- State homestead exemptions are key to protecting your equity.
- Filing Chapter 7 may allow you to keep your home if equity is exempt.
- Professional help can guide you through exemptions, filings, and protections.
Start Your Free Bankruptcy Evaluation
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