Posted on Friday, September 17th, 2010
This is one of the most common questions that clients ask: Whether they will be able to keep their home if they file for Chapter 7 bankruptcy protection.
Yes, it is possible to keep your home under a homestead exemption, under certain circumstances. Under both federal and state laws, there is an allowance for certain property to be exempt from sale during a bankruptcy proceeding. One of these exemptions is for your home. If the equity in your home is less than or equal to the homestead exemption applicable to you (depending on what state you live in), then the bankruptcy trustee will not sell your house to repay your creditors.
One thing to keep in mind is that you must continue to make the mortgage payment in order to keep your home. If the equity in your home exceeds the homestead exemption amount or if you are behind on your mortgage payments, then you may have to file for bankruptcy protection under Chapter 13 instead of Chapter 7, in order to keep your home.
Your bankruptcy attorney will be able to assist you in determining the best way to keep your home during the bankruptcy process. Please contact our office for more information or to discuss how we can help you.