Can You Lose a Home When You File Chapter 7?

Individuals filing for Chapter 7 bankruptcy are required to identify all of their assets, including their homes. However, federal and state bankruptcy laws may allow homeowners to keep their homes after the bankruptcy proceedings are final.

The Facts

The Chapter 7 Bankruptcy Code allows a bankruptcy trustee to sell an individual's non-exempt assets in order to pay back his creditors. Non-exempt assets may vary in each state, but typically include vacation homes, valuable collections and any other assets that are not considered as necessary for daily living.

Exemptions

The federal bankruptcy and homestead exemptions that are available in most states allow homeowners to protect their personal homes from being sold during the Chapter 7 bankruptcy process.

State Laws

Individuals living in Texas, Minnesota and 14 other states are able to select between using federal or state exemptions when they file for Chapter 7 bankruptcy.

Chapter 13

Debtors may consider filing for Chapter 13 bankruptcy instead of Chapter 7. Under the chapter 13 Bankruptcy Code, homeowners can avoid foreclosure by paying past due balances through a repayment plan.

Warning

The applicable bankruptcy laws and debt repayment options vary for each person. Individuals should seek help from the Consumer Credit Counseling Service or an experienced attorney before filing for bankruptcy.

References

• Find Law: Exempt vs. Non-exempt Property Under Chapter 7
• Moran Law: How Much Can I Exempt?
• U.S.Courts: Liquidation Under the Bankruptcy Code

Resources

• National Foundation for Credit Counseling