What happens to my house if i file bankruptcy?

What happens to my house if i file bankruptcy?

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Filing for bankruptcy can be a daunting process, and many homeowners may wonder what will happen to their house if they choose to take this step. In this article, we will explore the various scenarios that can occur when a homeowner files for bankruptcy and how it can impact their house.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the most common type of bankruptcy filed by individuals. When someone files for Chapter 7 bankruptcy, their non-exempt assets are liquidated to pay off their debts. However, the good news for homeowners is that there are exemptions in place to protect their primary residence.

Each state has its own set of exemptions, which determine the value of the home that can be protected. In some states, the exemption may cover the entire value of the home, while in others, it may only cover a certain amount. If the equity in the home exceeds the exemption limit, the bankruptcy trustee may sell the property to pay off the debts. However, in most cases, homeowners are able to keep their homes if they continue to make mortgage payments and remain current on their loan.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is another option available to homeowners. Unlike Chapter 7, Chapter 13 allows individuals to reorganize their debts and create a repayment plan over a period of three to five years. This type of bankruptcy is often chosen by homeowners who want to keep their homes and catch up on missed mortgage payments.

When filing for Chapter 13 bankruptcy, homeowners can include their mortgage arrears in the repayment plan. This allows them to make affordable monthly payments to catch up on the missed payments while continuing to make regular mortgage payments going forward. As long as the homeowner adheres to the repayment plan, they can keep their home and avoid foreclosure.

Foreclosure and Bankruptcy

In some cases, homeowners may be facing foreclosure proceedings when they decide to file for bankruptcy. Filing for bankruptcy can temporarily halt the foreclosure process through an automatic stay. The automatic stay prohibits creditors, including mortgage lenders, from taking any collection actions against the debtor, including foreclosure.

However, it’s important to note that the automatic stay is not a permanent solution. If the homeowner is unable to catch up on their mortgage payments or work out a solution with the lender, the foreclosure process may resume once the bankruptcy case is concluded. It’s crucial for homeowners to explore all available options and work closely with their lender to find a solution that allows them to keep their home.


Filing for bankruptcy does not automatically mean losing your house. The outcome depends on the type of bankruptcy filed, the exemptions available in your state, and your ability to catch up on missed mortgage payments. It’s essential to consult with a bankruptcy attorney to understand the specific implications for your situation and explore all available options.


– Nolo: www.nolo.com/legal-encyclopedia/bankruptcy
– United States Courts: www.uscourts.gov/services-forms/bankruptcy
– Investopedia: www.investopedia.com/terms/b/bankruptcy.asp

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