The short answer
Most people who file bankruptcy keep their house. The two most common chapters -- Chapter 7 and Chapter 13 -- both provide mechanisms to protect your home, but they work very differently.
In Chapter 7, you keep your house if the equity is protected by your state's homestead exemption and you stay current on mortgage payments. The trustee has no interest in selling a fully exempt home.
In Chapter 13, you keep your house while catching up on missed mortgage payments over 3 to 5 years. Chapter 13 can even strip off underwater second mortgages entirely.
11 U.S.C. § 522(d)(1): The federal homestead exemption allows a debtor to exempt up to $27,900 (2024 amount, adjusted every 3 years) of equity in the debtor's principal residence.
11 U.S.C. § 1322(b)(5): A Chapter 13 plan may provide for curing any default on a home mortgage while maintaining regular payments.
Explore the guide
We built separate pages for the most common questions about keeping your house in bankruptcy:
Your House in Chapter 7
When you can keep it, when you cannot, and how the trustee decides whether to sell.
Your House in Chapter 13
How Chapter 13 lets you catch up on missed payments and keep your home long-term.
Homestead Exemptions
State-by-state rules that protect your home equity. The single most important factor.
Mortgage Arrears
Behind on payments? Chapter 13 lets you cure the default over your plan period.
Foreclosure vs Bankruptcy
Timing matters. How the automatic stay stops foreclosure and what happens next.
Home Equity
How much equity you have determines what happens to your house in bankruptcy.
Lien Stripping
Remove a second mortgage entirely if your home is underwater. Chapter 13 only.
FAQ
Quick answers to the most common questions about bankruptcy and your house.
Chapter 7 vs Chapter 13 -- which protects your house better?
| Factor | Chapter 7 | Chapter 13 |
|---|---|---|
| Keep house if current? | Yes (if equity exempt) | Yes |
| Cure mortgage arrears? | No | Yes (3-5 years) |
| Stop foreclosure? | Temporarily | Yes (long-term) |
| Strip second mortgage? | No | Yes (if underwater) |
| Non-exempt equity risk? | Trustee may sell | Must pay equivalent |
If you are facing foreclosure, timing matters. The automatic stay under 11 U.S.C. § 362 takes effect the moment you file -- but if you wait too long, the lender may have already obtained a foreclosure judgment. Talk to a bankruptcy attorney before the sale date.
Key factors that determine whether you keep your house
- Your home equity vs. the homestead exemption. If your equity is less than or equal to your state's exemption, the trustee cannot touch it. This is the most important factor in Chapter 7.
- Whether you are current on mortgage payments. In Chapter 7, you must stay current. In Chapter 13, you can cure a default over 3 to 5 years.
- Which chapter you file. Chapter 13 offers far more protection for homeowners who are behind on payments.
- Your state's exemption laws. Some states (Texas, Florida, Kansas, Iowa) offer unlimited homestead exemptions. Others cap protection at a few thousand dollars.
- How long you have lived in your state. Under 11 U.S.C. § 522(b)(3)(A), you must have lived in your state for at least 730 days to use its exemptions. If you moved recently, your prior state's exemptions may apply.
The vast majority of bankruptcy filers keep their homes. Bankruptcy is designed to give you a fresh start -- not to make you homeless. The homestead exemption, the automatic stay, and the Chapter 13 cure provision all exist specifically to protect homeowners.