FAQ -- Keeping Your House in Bankruptcy

Most people do not lose their house in bankruptcy. In Chapter 7, your home is protected if your equity falls within the homestead exemption and you stay current on payments. In Chapter 13, you can keep your house while catching up on missed payments over 3 to 5 years.

Yes, if your home equity is protected by the homestead exemption and you continue making mortgage payments. The trustee only sells homes where there is significant non-exempt equity -- which is uncommon in most consumer cases. Read the full Chapter 7 guide →

Yes. Filing Chapter 13 immediately stops foreclosure through the automatic stay under 11 U.S.C. § 362. Your plan then spreads missed mortgage payments over 3 to 5 years while you resume regular payments going forward. This is one of the primary reasons people file Chapter 13. Read about foreclosure timing →

A homestead exemption protects a certain amount of equity in your primary residence from creditors and the bankruptcy trustee. The amount varies by state -- from a few thousand dollars to unlimited in states like Texas, Florida, and Kansas. If your equity is within the exemption, the trustee cannot sell your home. Read the full exemptions guide →

The amount depends on your state's homestead exemption. The federal exemption is $27,900 per person (2024 amount). State exemptions range from $0 (New Jersey) to unlimited (Texas, Florida, Kansas, Iowa). Married couples filing jointly can often double the exemption. See the exemption table →

Under 11 U.S.C. § 522(b)(3)(A), you must have been domiciled in your state for at least 730 days (2 years) to use that state's exemptions. If you moved within the last 2 years, you may need to use your prior state's exemptions. This rule prevents "exemption shopping."

Not necessarily. Many debtors use the "ride-through" approach -- continuing to pay without signing a reaffirmation agreement. Reaffirmation restores personal liability, which means the lender could pursue a deficiency if you later default. Some districts and lenders prefer reaffirmation for credit reporting purposes. Read about reaffirmation vs. ride-through →

In Chapter 7, the discharge eliminates your personal liability but the lien stays on the property. If you keep paying, you keep the house. If you stop, the lender can foreclose but cannot pursue you for any deficiency. In Chapter 13, you continue paying as normal after plan completion, and any stripped liens are permanently removed.

In Chapter 13, yes -- if the first mortgage balance exceeds the home's current market value, the second mortgage is treated as wholly unsecured under 11 U.S.C. § 506(a). It can be eliminated through the plan. Lien stripping is not available in Chapter 7.

Property tax arrears can be paid through a Chapter 13 plan, similar to mortgage arrears. Tax liens are generally treated as priority or secured claims and must be paid in full through the plan. The automatic stay also stops tax foreclosure proceedings while the case is active.

Yes, if you file before the sale occurs. The automatic stay under 11 U.S.C. § 362 takes effect immediately upon filing and halts all collection activity, including foreclosure. However, if you had a case dismissed within the past year, the stay may be limited to 30 days or may not apply at all under § 362(c)(3) and (c)(4). Read the foreclosure timing guide →

In Chapter 13, the stay can last for the entire 3-5 year plan period, provided you make all required payments. In Chapter 7, the stay typically lasts 3-4 months until the case is discharged or closed. The lender can also file a motion for relief from stay, which the court may grant if you are not making adequate protection payments.