Can You File Bankruptcy and Keep Your House?
Many homeowners can file bankruptcy without losing their homes. Whether you can keep yours generally depends on your equity, the exemptions available to you, your mortgage status and whether you file Chapter 7 or Chapter 13.
The question is not simply, “Do I own a house?”
The more useful questions are: How much net equity do I have? How much can I protect? Am I current on the mortgage? Can I afford the future payments? What would a trustee or Chapter 13 plan require?
A common misconception is that filing bankruptcy automatically requires surrendering most property. That is not how most consumer bankruptcy cases work. Bankruptcy exemptions may protect some or all of a filer’s equity in a residence, vehicle and other property.
This guide explains how a Chapter 7 bankruptcy trustee evaluates a home, how Chapter 13 may help protect a home or cure mortgage arrears, and which calculations to complete before filing.
Keeping a House in Chapter 7 vs. Chapter 13
The two chapters protect homes in different ways. This comparison provides a starting point, not a case-specific legal conclusion.
| Issue | Chapter 7 | Chapter 13 |
|---|---|---|
| Basic structure | A liquidation chapter in which a trustee may administer nonexempt property that has meaningful value for creditors. | A repayment chapter in which a filer proposes a plan generally lasting three to five years. |
| Home equity | Exemptions are used to protect equity. Significant nonexempt equity may create sale risk. | The filer generally keeps the house but may need to pay unsecured creditors at least the value required by the best-interests test. |
| Mortgage arrears | Chapter 7 generally does not provide a multi-year plan for curing mortgage arrears. | Past-due mortgage payments may often be cured through the plan while current payments continue. |
| Ongoing affordability | The mortgage lender’s lien generally remains. The homeowner must still determine whether future payments are affordable. | The homeowner generally must afford the plan payment plus any mortgage payments or other housing obligations required outside the plan. |
| Foreclosure | Filing may temporarily stop foreclosure, but Chapter 7 typically does not create a long-term arrears cure. | Filing may stop foreclosure and permit delinquent payments to be cured over time if the plan is feasible and applicable deadlines are met. |
| Main home-related risk | A trustee may consider selling a home when a sale would produce meaningful value for creditors after liens, exemptions and costs. | An unaffordable plan or missed post-filing mortgage payments may lead to dismissal or relief from the automatic stay. |
Estimate Your Home-Equity Risk Before Filing
The calculator below compares estimated home equity with the homestead-exemption information available for your state. It is an educational estimate and cannot account for every ownership, residency, valuation, lien or exemption issue.
Calculate the Risk of Losing Your Home
Enter your state, estimated home value and mortgage information to compare your estimated equity with available exemption information.
Do not transfer, gift, refinance or sell property based solely on a calculator result. Those actions can create significant bankruptcy consequences.
How Bankruptcy Homestead Exemptions Help Protect a House
Bankruptcy exemptions can protect various categories of property, including a residence, vehicle, household goods, certain retirement funds, public benefits and tools used for work. The federal exemption statute appears in 11 U.S.C. § 522 .
Which exemption system applies can depend on state law, where you lived before filing, how long you lived there, who owns the property, whether spouses file together and other facts. Some states require their own exemption system, while others permit eligible filers to choose between state and federal exemptions.
Because exemption laws and dollar amounts can change, use Ascend’s state-by-state bankruptcy homestead exemption guide as a research starting point and confirm the applicable rule before filing.
Current Federal Homestead Exemption
For bankruptcy cases filed on or after April 1, 2025, the federal homestead exemption under 11 U.S.C. § 522(d)(1) is $31,575.
In some joint cases, spouses may be able to claim separate exemption amounts when each spouse has an ownership interest and otherwise qualifies. Doubling is not automatic in every ownership or filing situation.
Federal bankruptcy dollar amounts are adjusted every three years. The next scheduled adjustment is April 1, 2028. Review the 2025 Judicial Conference adjustment notice .
How to Calculate Home Equity for Bankruptcy
Basic Home-Equity Calculation
Estimated home value − mortgage payoff − other valid liens = net equityConsider a home worth $300,000 with a $240,000 mortgage payoff and no other liens.
The next question is not simply whether the homeowner has $60,000 in equity. The analysis may also include:
Information That Can Affect the Home Analysis
- The exemption system that applies
- The available homestead-exemption amount
- Whether one or both spouses own the home
- Whether one or both spouses are filing
- The accuracy of the estimated market value
- The exact mortgage and lien payoff amounts
- Estimated real-estate sale costs
- Property-tax or association liens
- Judgment liens and whether they can be avoided
- Length of residence and ownership
- State-specific acreage or use requirements
- Whether a sale would meaningfully benefit creditors
Can I File Bankruptcy and Keep Both My House and Car?
Many filers keep both, but the home and vehicle must be analyzed separately. Each asset has its own value, liens, exemption category and payment requirements.
Keeping the House
The primary questions include net equity, the applicable homestead exemption, mortgage status and ongoing affordability.
Use the bankruptcy exemptions calculator and review your state’s homestead-exemption guide .
Keeping the Car
The vehicle analysis generally includes market value, loan payoff, available motor-vehicle or wildcard exemptions, payment status and whether the payment remains affordable.
Read Ascend’s guide to keeping a car in bankruptcy .
A bankruptcy attorney can compare each asset with the available exemptions before filing. When property may be exposed, the attorney can explain the risk and possible alternatives before a petition is filed.
What If I Have Too Much Equity in My House?
In Chapter 7, a trustee generally evaluates whether selling the house would generate meaningful funds after paying:
- Valid mortgages and liens
- Allowed costs of sale and administration
- The debtor’s allowed homestead exemption
- Other required amounts
If little or nothing would remain for unsecured creditors, a sale may not be economically worthwhile. If substantial value would remain, the risk may be greater.
Chapter 13 can provide a different path. A homeowner ordinarily retains property while proposing a repayment plan. However, nonexempt equity may increase the minimum amount that must be paid to unsecured creditors.
Estimate the Cost of Keeping a High-Equity Home Through Chapter 13
Chapter 13 may help when a homeowner has excess equity or needs time to cure mortgage arrears, but the plan must be financially feasible.
Estimate a Possible Chapter 13 Plan Payment
This calculator uses information drawn from official bankruptcy forms to estimate factors that may affect a Chapter 13 payment.
The result is an estimate only. Claims, trustee practices, local rules, attorney fees, tax debts, mortgage arrears, equity and case details may materially change the actual payment.
You can also review the official U.S. Courts bankruptcy forms used in consumer bankruptcy cases.
Why Might Someone Lose a House in Bankruptcy?
There are two fundamentally different home-loss risks: a trustee sale based on nonexempt equity and a lender foreclosure based on an unpaid mortgage.
The House Has Meaningful Nonexempt Equity
In Chapter 7, a trustee may seek authority to sell a residence when the sale is expected to produce meaningful value for the estate after liens, exemptions, sale costs and administrative expenses.
Review the U.S. Trustee Program’s Chapter 7 trustee handbook .
The Mortgage Cannot Be Maintained
Bankruptcy may discharge a borrower’s personal liability on qualifying mortgage debt, but it generally does not automatically remove the mortgage lien from the property.
If the required mortgage obligations are not maintained and no cure or modification is available, the lender may eventually pursue foreclosure after obtaining any required relief.
Surrendering an unaffordable home is not necessarily a failure. In some cases, surrender may allow the filer to eliminate an unsustainable housing expense and avoid continued financial deterioration. The decision should be evaluated against rental costs, relocation needs, potential tax issues, liens and the long-term budget.
Will I Lose My House If I File Chapter 13?
Chapter 13 generally allows a filer to retain property while repaying creditors through a court-supervised plan. It may be especially helpful when:
Situations Where Chapter 13 May Help Protect a Home
- The mortgage is behind
- A foreclosure sale is approaching
- The home has nonexempt equity
- Chapter 7 could create sale risk
- The homeowner needs time to cure arrears
- Priority tax debt affects the household budget
- A second mortgage or lien requires legal analysis
- The household has regular income for a plan
Chapter 13 can permit delinquent mortgage payments to be cured over time. However, the homeowner generally must also make all post-filing mortgage payments that become due during the plan.
Review the official U.S. Courts Chapter 13 Bankruptcy Basics .
Can I Keep My Home If I Am Behind on the Mortgage?
If a foreclosure sale is scheduled, prompt legal advice is important. Waiting until the final day can reduce the available options and create filing, notice and logistical risks.
Read Ascend’s detailed guide: Does Bankruptcy Stop or Delay Foreclosure?
Information to Gather Before a Foreclosure Consultation
- The scheduled foreclosure-sale date
- The most recent mortgage statement
- The total estimated arrears
- Any notice of default or acceleration
- Property-tax and insurance status
- Loan-modification applications
- Prior bankruptcy filing dates
- Current monthly household income
- Current monthly household expenses
- Estimated home value and all liens
Which Bankruptcy Home Scenario Is Closest to Yours?
This table identifies the central issue to investigate. It does not substitute for an exemption or foreclosure analysis.
| Home Situation | Primary Concern | Possible Path to Discuss |
|---|---|---|
| Current mortgage and little equity | Whether the exemption fully protects the estimated net equity. | Chapter 7 may be worth evaluating if the home is affordable and the equity is protected. |
| Current mortgage and substantial equity | Whether a Chapter 7 trustee could realize value from a sale. | Compare Chapter 13, nonbankruptcy repayment and other options before filing Chapter 7. |
| Behind on mortgage but future payments are affordable | Stopping foreclosure and curing arrears. | Chapter 13, a loan modification or another foreclosure-resolution option may be worth evaluating. |
| Behind on mortgage and future payments are unaffordable | Whether saving the home would create a sustainable budget. | Compare surrender, sale, modification and bankruptcy outcomes rather than focusing only on stopping the immediate foreclosure. |
| Jointly owned home but only one spouse is filing | Ownership interests, available exemptions and state marital property law. | Obtain a state-specific ownership and exemption analysis before filing. |
| Recently moved or recently purchased the home | Which state’s exemptions apply and whether federal homestead caps or domicile rules affect protection. | Confirm the applicable exemption system and timing rules with an attorney. |
Questions to Ask a Bankruptcy Attorney About Your House
- Which exemption system applies to me?
- How much homestead protection can I claim?
- What home value are you using?
- Do I need an appraisal or broker opinion?
- What are the exact mortgage and lien payoffs?
- How much nonexempt equity do you estimate?
- Would a Chapter 7 trustee likely view a sale as worthwhile?
- How would sale costs affect the analysis?
- Could a judgment lien be avoided?
- Would Chapter 13 allow me to retain the property?
- How would home equity affect my Chapter 13 payment?
- How would mortgage arrears be treated?
- Which mortgage payments would I make directly?
- What happens if I miss a payment after filing?
- What alternatives should I compare before filing?
- Is keeping this house realistic under my long-term budget?
Related Bankruptcy and Home Resources
Use these guides and tools to investigate the parts of the analysis most relevant to your circumstances.
Frequently Asked Questions About Keeping a House in Bankruptcy
These answers provide general education. Home and exemption outcomes depend on state law, ownership, liens, values and case details.
Can a Chapter 7 trustee sell my house?
Potentially. A trustee may consider a sale when the home contains enough nonexempt value to produce a meaningful benefit for creditors after paying liens, exemptions, sale costs and administrative expenses. A homeowner with fully protected equity may face much lower sale risk.
Does the homestead exemption eliminate my mortgage?
No. A homestead exemption protects qualifying equity from bankruptcy administration. It does not eliminate a consensual mortgage lien or excuse future mortgage payments.
What is the current federal homestead exemption?
For cases filed on or after April 1, 2025, the federal homestead exemption under 11 U.S.C. § 522(d)(1) is $31,575. Whether you may use the federal exemptions depends on the applicable domicile and state exemption rules.
Can married couples double the homestead exemption?
In some joint cases, spouses may each claim an exemption when both have a qualifying ownership interest and applicable law permits it. Doubling should not be assumed without reviewing title, filing status and the applicable exemption system.
Can Chapter 13 protect a home with too much equity for Chapter 7?
It may. Chapter 13 generally allows a filer to keep property, but nonexempt equity can increase the amount required for unsecured creditors. The resulting plan must still be feasible.
Can Chapter 13 catch up missed mortgage payments?
Chapter 13 may allow pre-filing mortgage arrears to be cured over the plan period. The homeowner generally must also make all mortgage payments that become due after filing.
What happens if I stop paying the mortgage after filing?
The lender may seek relief from the automatic stay, and the case or plan may face additional problems. Contact the bankruptcy attorney promptly if a post-filing mortgage payment cannot be made.
Does bankruptcy erase a mortgage lien?
Generally, no. A bankruptcy discharge may eliminate personal liability on qualifying debt, but a valid mortgage lien ordinarily remains attached to the property unless a specific legal process changes or removes it.
Should I use a tax assessment as my home value?
A tax assessment may be one data point, but it may not reflect current fair market value. When the exemption analysis is close, a comparative market analysis, broker opinion or appraisal may provide better evidence.
Is keeping the house always the best outcome?
No. A home may have sentimental or practical value but still be unaffordable after accounting for the mortgage, taxes, insurance, repairs, association dues and other household expenses. Compare the legal ability to keep the home with the financial ability to maintain it.
Estimate Your Risk Before Filing
Keeping a home in bankruptcy requires more than knowing the state exemption amount. You need a realistic property value, accurate lien payoffs, the correct exemption system and an affordable long-term housing plan.
Use Ascend’s free tools to estimate your home-equity risk, compare Chapter 7 and Chapter 13 and prepare questions for an attorney.
Calculator results are estimates and do not determine whether a trustee will administer property or whether a mortgage lender will pursue foreclosure. Exemptions, ownership interests, valuation methods, bankruptcy history and local practices can materially change an outcome. Ascend does not provide legal or financial advice.
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