If i file for bankruptcy what happens to my house?

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Filing for bankruptcy can be a difficult decision, and one of the concerns many people have is what will happen to their house. In this article, we will explore the different scenarios that can occur when someone files for bankruptcy and how it can impact their home.

Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy: Chapter 7 bankruptcy is a type of bankruptcy that involves the liquidation of assets to pay off debts. When someone files for Chapter 7 bankruptcy, a trustee is appointed to sell their non-exempt assets and distribute the proceeds to creditors.

Exempt vs. Non-Exempt Assets: In Chapter 7 bankruptcy, there are certain assets that are considered exempt and cannot be sold to pay off debts. These exemptions vary depending on state laws but typically include necessities such as clothing, furniture, and a certain amount of equity in a primary residence.

Homestead Exemption: The homestead exemption is a provision that allows homeowners to protect a certain amount of equity in their primary residence from being sold in bankruptcy. The amount of the exemption varies by state, and some states have unlimited homestead exemptions.

Impact on Your Home: If you file for Chapter 7 bankruptcy and your home has equity that exceeds the homestead exemption, it is possible that the trustee may sell your home to pay off your debts. However, if your home has little to no equity or is covered by the homestead exemption, you may be able to keep your home.

Chapter 13 Bankruptcy

What is Chapter 13 Bankruptcy: Chapter 13 bankruptcy is a type of bankruptcy that involves creating a repayment plan to pay off debts over a period of three to five years. Unlike Chapter 7 bankruptcy, Chapter 13 allows individuals to keep their assets while they repay their debts.

Protecting Your Home: In Chapter 13 bankruptcy, you can include your mortgage arrears and any other outstanding debts related to your home in your repayment plan. This allows you to catch up on missed mortgage payments and keep your home.

Keeping Up with Mortgage Payments: It is important to note that in Chapter 13 bankruptcy, you must continue to make your regular mortgage payments in addition to the payments outlined in your repayment plan. Failure to do so may result in foreclosure.

Foreclosure and Bankruptcy

Foreclosure Process: If you are behind on your mortgage payments and facing foreclosure, filing for bankruptcy can temporarily halt the foreclosure process. This is known as an automatic stay, which goes into effect as soon as you file for bankruptcy.

Chapter 7 and Foreclosure: While Chapter 7 bankruptcy can delay foreclosure, it does not provide a long-term solution to save your home. If you are unable to catch up on missed mortgage payments, the lender can eventually proceed with foreclosure.

Chapter 13 and Foreclosure: Chapter 13 bankruptcy can be a powerful tool to stop foreclosure and save your home. By including your mortgage arrears in your repayment plan, you can catch up on missed payments and prevent foreclosure.


Filing for bankruptcy can have different implications for your home depending on the type of bankruptcy you file and the equity in your property. In Chapter 7 bankruptcy, if your home has equity beyond the homestead exemption, it may be sold to pay off your debts. In Chapter 13 bankruptcy, you can include your mortgage arrears in your repayment plan and keep your home. It is important to consult with a bankruptcy attorney to understand the specific implications for your situation.


– Nolo: www.nolo.com
– United States Courts: www.uscourts.gov
– Investopedia: www.investopedia.com