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

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.

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.

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.

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.

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.