Like many people who file bankruptcy, you may worry about your ability to keep your house. While some people lose it during proceedings, this is not always the case. And it may not be for you. Whether you file Chapter 7 bankruptcy or Chapter 13 bankruptcy, it’s important to know how you can remain in your home.

Chapter 7

Keeping your home while filing Chapter 7 bankruptcy is difficult but possible. If you are behind on your mortgage payments or cannot afford them, you will likely face foreclosure. You could also lose your house depending on how much equity you have in it. Equity refers to the difference between your home’s market value and what you owe on your mortgage. In Missouri, your equity cannot exceed $15,000 if you want to keep your home when filing Chapter 7. If it does, you will likely have to forfeit your home to a bankruptcy trustee. They will then use it to repay your creditors.  Yet, if you remain current on your mortgage payments or have low or negative equity in your home, you will likely keep it.

Chapter 13

You will have an easier time keeping your home when filing Chapter 13 bankruptcy than Chapter 7 Bankruptcy. Chapter 13 discharges debts on a repayment plan, which includes any missed mortgage payments you have. If you’re current on your payments but have significant equity in your home, filing Chapter 13 protects your ownership. In this case, Chapter 7 bankruptcy would not. The only way you will lose your home when filing Chapter 13 is if you fail to make mortgage payments on time during the repayment period.

Filing bankruptcy is a scary prospect. But you will likely alleviate some of your concerns about the process by knowing you have ways to keep your home. An attorney with bankruptcy law experience can help you take the steps to do so.