ABA Family Legal Guide

Consumer Bankruptcy

Saving Your Home

I am going to declare bankruptcy. What are the chances I can keep my home?

You have a chance to keep your home–if you remember a few important things. Under either Chapter 7 or Chapter 13, you will be able to keep your home only if you continue to make the required ongoing monthly payments on your mortgage.

If you've fallen behind, under Chapter 7 you must make arrangements acceptable to your mortgage lender to catch up on any delinquent payments, and it's up to the mortgage company to decide whether to work with you.

Under Chapter 13, you may be able to include any delinquent payments in your payment plan and pay them off over a specified period of time while maintaining ongoing monthly mortgage payments.

Another factor determining whether you'll keep your home is whether you own the property with your spouse. Let's say you have plenty of debt, but your spouse has little or none. Many states will completely block or significantly limit the ability of unsecured creditors to reach property that you own together with your nonfiling spouse. (This is not true, however, in community property states.) Much may depend on how (i.e., in what form of joint ownership) you hold the home. Talk to a lawyer in your state about whether your can protect your home.