What happens if i file bankruptcy on my house?

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Filing for bankruptcy can be a difficult decision, especially when it comes to your house. If you find yourself in a situation where you are considering bankruptcy and wondering what will happen to your house, this article will provide you with an in-depth understanding of the potential outcomes.

What is Bankruptcy?

Bankruptcy is a legal process that allows individuals or businesses to seek relief from overwhelming debt. When filing for bankruptcy, you are essentially declaring that you are unable to repay your debts. There are different types of bankruptcy, but the two most common for individuals are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy and Your House

Chapter 7 bankruptcy is often referred to as liquidation bankruptcy. In this type of bankruptcy, a trustee is appointed to sell your non-exempt assets to repay your creditors. Your house may be considered an asset, but the good news is that there are exemptions that protect a certain amount of equity in your home.

If the equity in your house is below the exemption limit, you may be able to keep your home. However, if the equity exceeds the exemption limit, the trustee may sell your house to repay your creditors. It’s important to note that this process can vary depending on state laws, so consulting with a bankruptcy attorney is crucial to understand the specific implications for your situation.

Chapter 13 Bankruptcy and Your House

Chapter 13 bankruptcy is often referred to as reorganization bankruptcy. Unlike Chapter 7, Chapter 13 allows you to keep your assets while creating a repayment plan to pay off your debts over a period of three to five years.

Under Chapter 13, you can include your mortgage arrears in the repayment plan, which can help you catch up on missed payments and avoid foreclosure. However, it’s important to make all the required payments under the plan to keep your house. If you fail to make the payments, the lender may be able to proceed with foreclosure.

Foreclosure and Bankruptcy

Foreclosure is a legal process that allows a lender to take possession of a property when the borrower fails to make mortgage payments. Filing for bankruptcy can temporarily halt the foreclosure process through an automatic stay. This stay prevents creditors from taking any collection actions, including foreclosure, while the bankruptcy case is ongoing.

However, it’s important to note that bankruptcy does not permanently stop foreclosure. If you are unable to catch up on missed mortgage payments or make the required payments under a Chapter 13 repayment plan, the lender can seek relief from the automatic stay and proceed with foreclosure.


Filing bankruptcy on your house can have different outcomes depending on the type of bankruptcy you file and the specific circumstances of your case. Chapter 7 may require you to sell your house if the equity exceeds the exemption limit, while Chapter 13 can provide a repayment plan to help you catch up on missed payments and avoid foreclosure. It’s important to consult with a bankruptcy attorney to understand the implications for your specific situation.


– United States Courts: www.uscourts.gov
– Investopedia: www.investopedia.com
– Legal Information Institute: www.law.cornell.edu