What is a homestead exemption in bankruptcy?

A homestead exemption is a legal protection that shields a certain amount of your home equity from bankruptcy creditors. If your equity is below the exemption amount, a Chapter 7 trustee cannot sell your home because there would be nothing left for unsecured creditors after paying off the mortgage and your exemption. The exemption amount varies by state — from $5,000 in some states to unlimited in Florida and Texas. Some states let you choose between state and federal exemption schemes; the federal homestead exemption is $27,900 as of 2024.

What happens to my mortgage in Chapter 7 bankruptcy?

Your mortgage is a secured debt — it is not discharged by Chapter 7. The lender retains its lien on the property regardless of your bankruptcy discharge. To keep your home in Chapter 7, you must: (1) have equity within the homestead exemption, (2) be current on payments or bring them current, and (3) either reaffirm the mortgage (sign a new agreement keeping you personally liable) or simply keep paying without reaffirming (allowed in most states — you keep the house as long as you pay). If you stop paying, the lender can foreclose after the bankruptcy discharge removes the automatic stay.

Is Chapter 13 better than Chapter 7 for keeping my house?

It depends on your situation. Chapter 13 is often better if: you're behind on mortgage payments (it lets you cure arrears over 3–5 years while stopping foreclosure), or your equity exceeds the homestead exemption (you pay the at-risk equity amount into the plan instead of losing the house). Chapter 7 is fine if your equity is fully within the exemption AND you're current on payments. Chapter 13 has a higher monthly payment burden and lasts 3–5 years, so if Chapter 7 protects your home, it's the faster and simpler option.

Can I keep my house if I'm behind on mortgage payments?

Not in Chapter 7 — if you're significantly behind, the lender will eventually get relief from the automatic stay and proceed with foreclosure after discharge. Chapter 13 is specifically designed for this situation. It allows you to cure mortgage arrears through a 3–5 year repayment plan while making current mortgage payments. The moment you file Chapter 13, foreclosure stops. As long as you make plan payments and keep current on the mortgage going forward, you keep the house. Most Chapter 13 filers who are behind on their mortgage file precisely to save their home.

What if my spouse and I co-own the home — can we double the exemption?

In many states, yes — married couples filing jointly can double the homestead exemption. For example, if the state exemption is $75,000, a married couple may protect $150,000 in equity. Some states explicitly allow doubling (California, New York, many others); some don't (Texas and Florida have unlimited exemptions so doubling is irrelevant); and some states have specific rules. The federal exemption doubles to $55,800 for joint filers. This is one of the most powerful planning considerations for married homeowners — the calculator shows the doubled exemption option where applicable.

🆘Debt Relief

Can I Keep My House in Bankruptcy? Check Your Homestead Exemption.

Is your home equity protected by your state exemption?

What This Does

Losing your home is the fear that stops many people from filing bankruptcy — but whether you can keep it depends almost entirely on two numbers: how much equity you have, and how large your state's homestead exemption is. If your equity falls within the exemption, a Chapter 7 trustee has no financial incentive to sell your home and you keep it. If your equity exceeds the exemption, the trustee can sell the property, pay you the exemption amount, and distribute the rest to creditors. The homestead exemption is the legal shield that protects a portion of your home equity in bankruptcy. It varies wildly by state — from a few thousand dollars to unlimited in states like Florida and Texas. Federal bankruptcy exemptions offer $27,900 (as of 2024), and some states let you choose whichever set is more generous. There are two key conditions beyond the exemption: you must be current on your mortgage payments (or able to get current), and you must be able to reaffirm the debt or keep making payments. Chapter 7 discharges unsecured debt but does not eliminate secured mortgages — your lender retains its lien. If you're behind on payments, Chapter 13 is usually the better path because it allows you to cure arrears over a 3–5 year plan while keeping the home. This calculator helps you determine whether your home equity is protected, how much equity is at risk, and which chapter of bankruptcy gives you the best chance of keeping your house.

Assumptions

·Home equity = current market value minus all mortgage balances (first, second, HELOC)
·Protected equity = the lesser of your actual equity and your state homestead exemption
·At-risk equity = max(0, equity – homestead exemption)
·Chapter 7 is safe for the home if at-risk equity = $0
·Federal exemption ($27,900 as of 2024) is available in states that allow the federal scheme
·Married couples filing jointly may double the exemption in states that permit it (noted per state)
·You must remain current on mortgage payments to keep the home under any bankruptcy chapter
·Lender retains its lien regardless of discharge — bankruptcy does not eliminate the mortgage obligation
·State exemption amounts are approximate and subject to periodic adjustment — verify current amounts with a licensed attorney

How It's Calculated

Equity = Home Value – Mortgage Balance(s) Protected Equity = min(Equity, State Homestead Exemption) At-Risk Equity = max(0, Equity – Homestead Exemption) Chapter 7 Safety: If At-Risk Equity = $0 → Home is protected (trustee won't sell) If At-Risk Equity > $0 → Trustee may sell; Chapter 13 recommended Chapter 13 (5-Year Plan): Monthly Plan Payment ≈ At-Risk Equity ÷ 60 + Priority Debts ÷ 60 (Plus: mortgage arrears cured over plan period) Mortgage Arrears Cure (Ch.13): Monthly Cure Payment = Total Arrears ÷ Plan Months (36–60)

When Should You Use This?

→You're considering bankruptcy and own a home with equity
→You want to know if Chapter 7 or Chapter 13 is safer for homeowners in your state
→You're behind on your mortgage and want to understand your options
→You want to see how your state's homestead exemption compares to your equity
→You're trying to decide between filing now vs. waiting to build less equity
→You want to understand what happens to a jointly-owned home in bankruptcy

Example Scenario

David and Maria in Ohio own a home worth $285,000 with a $240,000 mortgage balance — equity of $45,000. Ohio's homestead exemption is $136,925. Since their equity ($45,000) is well below the exemption, a Chapter 7 trustee has no incentive to sell the home. They are current on their mortgage and plan to reaffirm the debt. The calculator shows their home is fully protected and they can proceed with Chapter 7 to discharge $62,000 in credit card and medical debt without risking the house.

Educational Simulation Only

Exemption amounts are approximate and subject to periodic adjustment. This does not constitute legal advice. Consult a licensed bankruptcy attorney before making any decisions.

🏠 Bankruptcy Homestead Exemption Calculator

Can I Keep My House? · Protection Status · Chapter 13 Plan · State Comparison

All 50 states + DC. Updates in real time. Includes Chapter 7 vs. 13 analysis and equity-at-risk calculation.

📍 State & Filing

State of Filing

Exemption: $161,375 · Doubles for joint filing

Filing Type

🏠 Property Values

Current Home Value

First Mortgage Balance

Second Mortgage

HELOC Balance

💳 Debt & Payment Status

Mortgage Arrears (past due)

Total Unsecured Debt

Ch.13 Plan Length (36-60 mo)

About This Calculator

This bankruptcy homestead exemption calculator computes home protection status in real time from 9 inputs. Core formula: equity = max(0, homeValue - mortgage1 - mortgage2 - heloc). stateExemption = state single value (doubled if joint + canDouble). appliedExemption = max(stateEx, federalEx) if allowsFederal. protectedEquity = min(equity, appliedExemption). atRiskEquity = max(0, equity - appliedExemption). Protection tiers: no-equity (equity=0), fully-protected (atRisk=0), partially-at-risk (atRisk less than 30% of equity), at-risk (otherwise). All 9 inputs update in real time via useEffect.

The Protection tab renders a BarChart of 4 values (equity, exemption, protected, at-risk) colored by protection status, plus a calculation waterfall table, recommendation badge, key findings, and action plan. The Ch.13 tab renders a donut PieChart of monthly plan split (arrears cure vs unsecured distribution) with side payment cards, plus a Ch.7 vs Ch.13 comparison table. The Scenarios tab renders a stacked BarChart (green = protected, red = at-risk) at 5 home value scenarios (-20%/-10%/current/+10%/+20%) plus a scenario table with status badges. The States tab renders a BarChart of top 12 states by exemption amount with your state highlighted, ReferenceLine at federal amount, plus a full 51-state scrollable table.

Educational simulation only. Exemption amounts are approximate 2024 values. Consult a licensed bankruptcy attorney before making any decisions.

Related Calculators

Browse all

🆘More Debt Relief

You Might Also Need

All Debt Relief Calculators

23 free tools

Common Mistakes to Avoid

✕Using the home's purchase price instead of current market value when calculating equity
✕Forgetting to subtract second mortgages and HELOCs from equity
✕Assuming the homestead exemption protects the home regardless of equity — it only protects equity up to the exemption amount
✕Not checking whether your state allows the federal exemption scheme (which may be more generous)
✕Filing Chapter 7 when behind on mortgage payments — this does not stop foreclosure long-term

Frequently Asked Questions