How to file for bankruptcy and keep your house?

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Filing for bankruptcy can be a daunting process, but it doesn’t necessarily mean that you will lose your house. In this article, we will explore the steps you can take to file for bankruptcy while keeping your house. We will discuss different bankruptcy chapters, exemptions, and strategies that can help you protect your home during this challenging time.

Understanding Bankruptcy Chapters

Chapter 7 Bankruptcy: Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of non-exempt assets to repay creditors. However, certain exemptions can protect your home equity, allowing you to keep your house. These exemptions vary from state to state, so it’s essential to consult with a bankruptcy attorney familiar with your jurisdiction’s laws.

Chapter 13 Bankruptcy: Chapter 13 bankruptcy, often referred to as reorganization bankruptcy, allows you to create a repayment plan to pay off your debts over a three to five-year period. This type of bankruptcy can be a viable option if you have a regular income and want to keep your house. The repayment plan will include your mortgage arrears and other debts, allowing you to catch up on missed payments while retaining ownership of your home.

Exemptions and Homestead Exemptions

Exemptions: Bankruptcy exemptions protect certain assets from being liquidated to repay creditors. These exemptions can include personal property, vehicles, retirement accounts, and, most importantly, your home. The specific exemptions available to you will depend on your state’s laws.

Homestead Exemptions: Homestead exemptions are a type of bankruptcy exemption specifically designed to protect your primary residence. The amount of the exemption varies from state to state, and some states have unlimited homestead exemptions. This means that even if you have significant equity in your home, it may be fully protected under the homestead exemption.

Strategies to Protect Your Home

Reaffirmation Agreement: In a Chapter 7 bankruptcy, you may have the option to enter into a reaffirmation agreement with your mortgage lender. This agreement allows you to keep your home by agreeing to continue making mortgage payments as if the bankruptcy had not occurred. It’s crucial to consider the long-term financial implications before entering into a reaffirmation agreement.

Loan Modification: If you are facing financial difficulties but want to keep your home, you may explore the possibility of a loan modification. A loan modification involves negotiating with your mortgage lender to change the terms of your loan, such as reducing the interest rate, extending the loan term, or even forgiving a portion of the principal balance. This can make your mortgage payments more affordable and help you avoid foreclosure.

Consulting with a Bankruptcy Attorney: Bankruptcy laws can be complex, and the outcome of your case may depend on various factors. It’s highly recommended to consult with a bankruptcy attorney who can guide you through the process and help you make informed decisions regarding your home and other assets.


Filing for bankruptcy does not automatically mean losing your house. By understanding the different bankruptcy chapters, exemptions, and strategies available, you can take steps to protect your home during this challenging time. It’s crucial to consult with a bankruptcy attorney who can provide personalized advice based on your specific circumstances.


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