Can You File Bankruptcy and Keep Your House?

Written by Casey Yontz, JD, Bankruptcy Content Editor

Legally reviewed by Benjamin Wright, Bankruptcy Attorney (18+ years experience)

Last reviewed on September 5, 2026

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Yes, in many cases you can file bankruptcy and keep your house. Equity is probably the most important factor in determining whether you can.

When I sit down with a client or potential client I want to know how much equity they have in their home and whether that equity is protected by a homestead exemption. Next I want to know whether they are current on the mortgage, whether they want to keep the house, and whether or not they can afford their mortgage payment going forward. These facts usually tell me what options we need to start looking at.

Bankruptcy law was designed to protect certain property, including homes. Bankruptcy law, through 11 U.S.C. § 522 gives bankruptcy filers (or "debtor(s)") the ability to use an exemption to protect their home. Exemptions have different effects depending on the chapter of bankruptcy that is filed.

In Chapter 7 bankruptcy , if your home equity is protected and you are current on a mortgage you can afford, you should be able to discharge certain qualifying debts and keep your house. If you are behind on the mortgage and have mortgage arrears, facing foreclosure, or have equity that creates a problem in Chapter 7, Chapter 13 bankruptcy may provide better options.

How Bankruptcy Exemptions Protect Your Home Equity

Home equity is the difference between what your house is worth and what you owe on it. For example, if your home's value is $600,000 and you owe $300,000 on the mortgage, you have approximately $300,000 in equity.

So how much of your equity is protected? That depends on the exemptions you are allowed to use. The type of exemption people commonly use to protect their homes is called a "homestead exemption." Homestead exemption laws are different in each jurisdiction. So it is really important for you to know what exemption you're allowed to use, and how much protection it provides.

Which Homestead Exemption Can I Use?

Which homestead exemption you can use usually depends on where you've lived. Generally, you must have been domiciled in your state for at least 730 days before filing a bankruptcy case to use that state's exemption law. So if you've recently moved, the answer to what exemptions you may use might not be straightforward.

A common mistake I see is the assumption that the homestead exemption in the state where you live automatically applies to your case. That's usually true if you've lived in your state long enough, but recent moves can change the analysis. Before I decide whether someone's home equity is protected, I want to know which exemption law actually applies first.

"It's always important to do a thorough analysis of what bankruptcy exemptions are available before you start analyzing someone's homestead situation, but it's especially important in a state like Arizona where people are constantly moving in from other states," said Ben Wright, a bankruptcy attorney and contributor here at USBankruptcyHelp.com. "I've seen other lawyers not press this issue hard enough and the result was their clients weren't able to use the homestead exemption they thought they could use."

Use the Bankruptcy Exemption Law Finder

If you're not sure which exemptions you can use, feel free to use our Bankruptcy Exemption Law Finder as a starting point. The tool uses your residency history to help figure out which exemption system may apply in bankruptcy. This can be especially useful if you've recently moved. The tool doesn't replace advice from a bankruptcy attorney, but it can help you understand the issue before you speak with one. You can save and/or print your results. You do not need to provide your name, email address, or phone number to use it.

"Before I meet with a potential client I usually send them an email with a link to the Bankruptcy Exemption Law Finder," said Scott Greeves, a bankruptcy attorney and contributor here at USBankruptcyHelp.com. "The potential client usually comes in with a printout of their results. We go over them, and I usually make notes on the printout. It's a great way to start our discussion about residency and exemptions."

Can You Keep Your House in Chapter 7 Bankruptcy?

Yes, many people keep their homes when they file Chapter 7. Here the filer's equity and applicable homestead exemption are very important considerations.

Your Home Equity Needs to Be Protected in Chapter 7

Chapter 7 is considered a "liquidation" chapter of bankruptcy. Under 11 U.S.C. § 704 , one of the Chapter 7 trustee's responsibilities is to "collect and reduce to money the property of the estate." That scary phrase means that if you have property that is not exempt, the Chapter 7 trustee is authorized to sell that property to pay creditors. So if your state's homestead exemption doesn't protect all of your equity, the trustee will determine whether there is enough nonexempt value to administer the property for creditors. However if your state's homestead exemption does protect 100% of your equity, there is no unprotected equity for the trustee to administer for creditors.

Being Behind on the Mortgage Is a Separate Issue

Chapter 7 doesn't resolve past due mortgage payments. Even when the home's equity is fully exempt and protected from the Chapter 7 trustee, if you file Chapter 7 and the mortgage isn't current, a mortgage lender could ask the court for relief from the automatic stay under 11 U.S.C. § 362(d) . This is relevant if you are getting pressure from your lender about past-due payments or if you have a foreclosure sale date scheduled. While the automatic stay should go into place when the Chapter 7 case is filed, the stay may only be temporary if you're in a situation where you're behind on your mortgage or facing foreclosure pressure.

"Chapter 7 can stop a foreclosure sale from taking place but that is only going to be temporary," said Wright. "If someone is behind on their home and they want to keep that home, Chapter 13 may be a better option because it allows you to catch up arrears over time."

Can You Keep Your House in Chapter 13 Bankruptcy?

Like Chapter 7, the automatic stay goes into effect when a Chapter 13 case is filed. The difference is that in Chapter 13 you file a Chapter 13 plan that lasts three to five years.

Chapter 13 Can Give You Time to Catch Up on Your Mortgage

The Chapter 13 plan you file can provide for full payment of your mortgage arrears. Chapter 13 allows you to cure that default over time while maintaining the mortgage payments that come due during your case. This is allowed by 11 U.S.C. § 1322(b)(5) .

Here's an example that illustrates this. Assume for example that you are $25,000 behind on your mortgage and you file a Chapter 13 case with a 60-month plan. Rather than paying the $25,000 at once, the 60-month Chapter 13 plan you filed will spread the $25,000 over the 60 months. If you successfully complete this plan and stay current on your mortgage payments that come due during the case, you can finish Chapter 13 completely caught up on your mortgage and avoid foreclosure.

"Chapter 13 is a very effective way to stop a foreclosure if necessary through the automatic stay, and pay your mortgage arrears through your Chapter 13 plan," said Wright. "As long as you continue making your ongoing mortgage payment and the plan payment, you can avoid a catastrophic foreclosure situation. Chapter 13 has been a godsend for a lot of my clients who thought they had no way to save their house."

The video below explains how Chapter 13 can stop a foreclosure and give you time to catch up on missed mortgage payments through the plan.

Chapter 13 Can Also Help With Nonexempt Home Equity

Chapter 13 can also help when your home equity is not fully protected by an exemption. Instead of a Chapter 7 trustee liquidating nonexempt property, a Chapter 13 plan can allow you to keep the home while paying creditors the amount bankruptcy law requires because of that nonexempt equity. This requirement comes from 11 U.S.C. § 1325(a)(4) .

"Chapter 13 is very useful in the right situation when you have someone who has serious debt issues but also has significant equity in their home that isn't protected fully by a homestead exemption," said Greeves.

Estimate How Much of Your Home Equity May Be Protected

By this point, hopefully you have a pretty good idea of what bankruptcy exemption law applies to you, either through the residency analysis above or by using our Bankruptcy Exemption Law Finder . The next question is how much of your home equity that exemption may protect.

You can use our Homestead Exemption Estimator to get a preliminary answer. The tool allows you to enter your home's information to get an idea of whether your home equity appears fully protected. Select the state whose exemption law applies to you, enter your home's value, mortgage balance, and other liens. The tool applies the homestead exemption information for that state and shows whether your equity appears fully protected or whether some equity may be nonexempt.

The tool isn't a substitute for legal advice. Treat your result as a starting point. You can save or print a PDF of your results for your records. We don't ask for personal or contact information, and the tool is free to use as many times as you want.

What If a Foreclosure Sale Is Already Scheduled?

If you have a foreclosure sale date timing is extremely important. As we have already seen, filing bankruptcy before the foreclosure sale triggers the automatic stay under 11 U.S.C. § 362, which stops the foreclosure from going forward. If the bankruptcy case is not filed before the foreclosure sale, state law may determine whether it is too late to use bankruptcy to save the home.

Giving prompt notice of the bankruptcy filing to your mortgage lender is also very important. When a bankruptcy case is filed, creditors that are listed in the case are usually given notice through the mail. If there is a foreclosure coming soon, I don't rely on mailed notice alone. I take extra steps to make sure the mortgage lender and its attorneys, if any, know about the filing immediately.

I also get written confirmation that they are aware of the bankruptcy filing. An email usually works for this. Depending on how close the sale is, that may mean emailing the lender's attorney(s), contacting the lender directly, or even hand-delivering notice if that's what it takes. If the foreclosure sale is imminent, I want to make sure there is no question that notice has been received and confirmed by the lender.

Common Mistakes Homeowners Make When Filing Bankruptcy

The mistakes I see people make when they are trying to keep their home in bankruptcy are usually related to acting before fully understanding their home value and equity, not fully exploring their exemption rights, or probably the most tragic, not filing in time. These are some of the issues I would pay particular attention to.

Assuming Your Current State's Homestead Exemption Applies

Make sure you understand exactly which homestead exemption applies to your situation. If you recently moved, you probably shouldn't assume the homestead exemption in your current state automatically applies.

Guessing at Your Home Equity

Do whatever you have to do to get an accurate value of your home. There are a lot of online tools and they all seem to come up with different values on different days. If it's close, it may be worth a professional appraisal.

Waiting Too Long When a Foreclosure Sale Is Scheduled

We discussed this a few times on this page and it's so important that I think it's worth mentioning again. The timing of your bankruptcy filing matters. Do not wait until the last minute. Waiting until the last minute creates unnecessary risk, and less time to prepare the case properly.

Transferring the House Before Getting Advice

Believe it or not, this is something that I have seen people do and it's usually before they speak to a bankruptcy lawyer. Adding someone to the deed, transferring the house to a friend or family member, or changing ownership before bankruptcy can create problems that didn't exist before. If you believe your home equity may be difficult to protect, it's usually best to analyze the value, liens, exemptions, and bankruptcy options before changing title to the property.

Frequently Asked Questions About Keeping Your Home in Bankruptcy

Can I Remove a Second Mortgage in Chapter 13?

Yes, you can remove a second mortgage in some Chapter 13 cases. If your home's value is less than the amount owed on your first mortgage, a junior lien, like a second mortgage or a HELOC, may be treated as unsecured through the Chapter 13 plan and removed through discharge upon successful completion of Chapter 13. This is commonly called lien stripping and involves 11 U.S.C. § 506 and the Chapter 13 plan rules in 11 U.S.C. § 1322. Whether lien stripping is available in your situation depends on your home's value, senior liens, the nature of the junior lien, and the law in your jurisdiction.

Can I Sell My House While I Am in Bankruptcy?

Yes, you can sell your house while you are in bankruptcy, but this may require court approval. The ability to sell your home while you're in bankruptcy usually depends on the chapter, whether the property is still property of the bankruptcy estate, the terms of a confirmed Chapter 13 plan, and local court rules.

How Does Bankruptcy Handle HOA Liens and Dues?

HOA debt can involve both a personal unsecured liability and a lien against your property. Bankruptcy may discharge qualifying personal liability for some pre-filing HOA debt, but a valid recorded HOA lien can remain attached to the home unless it is satisfied, avoided, or otherwise dealt with under applicable law.

HOA payments that come due after the bankruptcy is filed can also remain the homeowner's responsibility while the debtor or trustee continues to have a legal, equitable, or possessory ownership interest in the property. See 11 U.S.C. § 523(a)(16).

How Long After Bankruptcy Can I Get a Mortgage?

This depends on the circumstances. There isn't one waiting period that applies to every home loan. How long you can get a mortgage after bankruptcy usually depends on the type of bankruptcy you file, how the case ended, and the mortgage program you want to use. FHA, conventional, VA, and other loan programs can have different time requirements, and private lenders may impose additional standards.

Current FHA guidelines generally use a two-year period after a Chapter 7 discharge, while someone in Chapter 13 may be able to qualify after making at least 12 months of satisfactory plan payments and receiving written permission from the bankruptcy court to enter into the mortgage transaction. Conventional mortgage rules can be different, so I would check the requirements for the particular loan program you plan to use.

Can I Buy a House After Bankruptcy?

Yes. Filing bankruptcy does not permanently prevent you from buying a house. The more practical question is when you will qualify for the mortgage program you want to use. Lenders can look at your credit history after bankruptcy, income, current debts, payment history, and the waiting period required by the particular loan program.

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