Call For A Free Consultation
Cape Girardeau:

Will you lose your house in chapter 7 bankruptcy?

Many people struggle for years with high debt and aggressive creditors instead of pursuing bankruptcy. They may worry that declaring bankruptcy will ruin their credit, take away their car and maybe even their house. Losing a house is a particularly strong pain point. Homes are central to our lives – they carry special memories, provide shelter and represent a family’s unique personality.

The prospect of losing a home may keep some individuals from declaring bankruptcy out of fear. The idea of bankruptcy may be intimidating, but in reality it is a tool that helps people get out of debt and start over. What actually happens to a person’s house when they file for chapter 7 bankruptcy?

Exempt property

Under chapter 7 bankruptcy, you will have to turn over some of your assets to the “bankruptcy estate.” The assets that you turn over go towards paying off your debts. These might include expensive family heirlooms, second cars, investments or select pieces of jewelry.

Certain assets, including all modern day necessities, are exempt from liquidation. This is known as “exempt” property. You are able to hold onto your family home, along with other key assets including:

  • Reasonably priced vehicles
  • Appliances
  • Clothing
  • Pensions
  • A portion of your wages
  • Public benefits
  • Personal injury damages

This does not mean that you are able to retain any and all houses. If you live in an extravagant home, or have a vacation home, you should expect to turn over these properties. If your family home is considered overly extravagant, you will have to find a more affordable housing option; however, the court will not leave you entirely without a house.

Mortgage payments

Even if you are allowed to keep your home during the bankruptcy process, you may want to consider relocating to a smaller home with lower mortgage payments.

Bankruptcy does not eliminate mortgage payments. You still need to make regular payments to avoid foreclosure. If your payments are higher than you feel comfortable paying, consider proactively downsizing to keep your finances under control.

If you are considering bankruptcy, contact an attorney who can help you evaluate your options and determine what opportunity is right for you.

No Comments

Leave a comment
Comment Information
Email Us For A Response

Schedule A Free Consultation

Contact the Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Cape Girardeau Office 815 Independence Street Cape Girardeau, MO 63703 Phone: 573-651-8644 Fax: 573-651-8636 Cape Girardeau Law Office Map

Fredericktown Office 129 E. Main Street Fredericktown, MO 63645 Phone: 573-783-5100 Fax: 573-651-8636 Map & Directions

review us