Will I Lose My Home if I File for Bankruptcy?

The short answer to this question is no, you will not lose your house

There is no requirement in the Federal Bankruptcy Code that requires you to surrender your home. How relevant your home is in a Bankruptcy proceeding depends on the chapter of Bankruptcy that you file.

Chapter 13 Bankruptcy

Filing a Chapter 13 Bankruptcy can do a number of helpful things; regarding your home, you can stop a foreclosure proceeding and/or bring all of your mortgage arrears current through the Chapter 13 Plan that you, your attorney, and the Chapter 13 Trustee agree upon.

With a Chapter 13 Bankruptcy Plan, you will be making a monthly payment to a Trustee. This payment will include any past due amounts owed to your mortgage company. You must also continue making your regular mortgage payment and keep your ongoing mortgage payments current. It is important to make your Trustee payments for the entire duration of your plan (usually 3-5 years) and to not miss any of your regular monthly mortgage payments.

Chapter 7 Bankruptcy

Filing a Chapter 7 Bankruptcy only puts your home at risk if you are delinquent on the payment to the mortgage company and/or there is equity in your home. In a Bankruptcy proceeding, there is only equity if your home’s value exceeds the amount owed, plus your allowable exemptions. The exemptions are specific to the state in which you file. If your home is not exempt, then it can be sold by the Chapter 7 Trustee. The money made from this sale is used to pay your creditors.

A qualified Bankruptcy attorney will determine all of the necessary qualifications for you, and make sure that your case proceeds smoothly.

Preparing for a 341 Meeting of Creditors


Upon filing a Chapter 13 Bankruptcy petition with the U.S. Federal Court, your case will be assigned by the Court to a specific Trustee that will oversee, and administer your case. Once a Trustee is assigned to your case, a Creditor Meeting under Section 341 of the Bankruptcy Code will be scheduled by the clerk of the court. The clerk will then send a notice of the time and place of this meeting to you and all your creditors.

You must appear at this meeting and answer questions from the Trustee about your petition.

Your creditors do not usually attend this meeting. The Trustee will ask you a series of questions related to your bankruptcy petition, schedules and relate documents that were filed with the court. This meeting is fairly quick. Your attorney will attend this meeting with you but cannot respond to the questions for you. You will answer these questions under oath, so it is imperative that you are honest.

Once the 341 Meeting is underway, some of the questions asked may include the following:

  1. Did you read and sign all the documents related to your case?
  2. Is all the information in these documents true and correct?
  3. Are all your creditors listed, including friends or relatives to whom you owe money?
  4. What is your reason for filing for bankruptcy?
  5. Are all your assets listed on your petition, including any and all bank accounts of any kind, real property in any country, and any and all personal property (jewelry, art, collectibles, vehicles, etc.)?
  6. Do you have any mortgages or other real estate interests?
  7. Have you ever filed Bankruptcy before?
  8. What is your job?
    1. Are you paid hourly or are you salaried, and what is this amount?
      b. How often are you paid?
    2. Do you have any alimony or child support obligations?
  9. Do you own any businesses?
  10. Are you the beneficiary of or the trustee of any trust?
  11. Are you going to receive any inheritance upon someone’s death?
  12. Are you entitled to the life insurance proceeds of anyone?
  13. Do you have any ongoing lawsuits against someone else?

The specific questions will generally vary by jurisdiction. Your attorney will go over all of the specifics with you prior to your hearing. When scheduled a 341 meeting, it is best to have an experienced bankruptcy attorney walk you through the process and represent you on the day of your meeting. Call attorney Matthew Cherney to schedule a consultation today.

Representation in a Bankruptcy Case

You have 2 options when it comes to representation in your bankruptcy case:

  1. Hire an attorney to represent you OR
  2. Represent yourself (this is called “pro se”).

There are many complicated issues that arise in a bankruptcy proceeding, and an attorney can effectively navigate these complexities for you.

A recent Federal Bankruptcy Court filing report showed that only 61% of Chapter 7 pro se bankruptcy cases end up with a positive outcome (an order of discharge) versus 99% of Chapter 7 cases filed with an attorney. While there are several reasons for this, the most important thing to understand is that every single case filed must, with no exceptions, follow the strictly regulated Federal Bankruptcy Code, in addition to following any and all local/state procedures. If these rules are not properly followed, the case may be dismissed.

Some of the more common mistakes made by people filing for bankruptcy without an attorney:

  1. Incorrectly filing for a Chapter 7 instead of a Chapter 13 (or vice versa);
  2. Failing to apply the Chapter 7 Means Test correctly;
  3. Failing to timely file necessary documents with the court;
  4.  Claiming an inaccurate number of property exemptions;
  5. Making mistakes regarding reaffirmation agreements (i.e. vehicles);
  6. Responding to a creditor’s objections incorrectly;
  7. Misunderstanding the terms of documents filed with the court;

Any one of these mistakes may be enough for the court to dismiss your case, denying a discharge in your case, or possibly cause you to lose property that you own. While it is true that there are fees involved when you hire an attorney to represent you, there are also fees if filing pro se.

There are rules in the Bankruptcy Code as to attorney fees, and these fees are always approved by the court

In the long run, if a case is filed pro se and is then dismissed, the restrictions imposed on you by the court are serious. It is possible that a judge may not allow you to file another case for a number of months or years. If your case is dismissed, then you automatically lose all of the important protections you received upon your case filing, including protection from foreclosure and repossession.

IF MY HOME IS CURRENTLY IN FORECLOSURE AND I WANT TO KEEP MY HOME, WHICH IS A BETTER OPTION: CHAPTER 7 OR CHAPTER 13

Make sure you have all the bankruptcy information

As a debtor filing for bankruptcy, you are entitled by law to a court-ordered rule of protection known as the automatic stay. This applies in a Chapter 7 and in a Chapter 13 filing. There are several creditor activities that the automatic stay protects and/or prohibits. One of the prohibited acts involves any creditor continuing a foreclosure sale that has begun prior to the bankruptcy filing, or starting a foreclosure proceeding during the length of the bankruptcy case. If you want to file for bankruptcy and keep your home, there are certain requirements that must be met. A qualified attorney will look at your situation in detail to determine whether you meet the requirements.

See Chapter 7 vs Chapter 13

In a Chapter 7 filing, a debtor can buy some time for him/herself with the automatic stay by preventing immediate foreclosure on a debt secured by real estate. If there is a scheduled foreclosure sale, this sale gets cancelled. It is very important to note: the debt that is allowed to be wiped out in a Chapter 7 does not include missed mortgage payments. Once the debtor in a Chapter 7 receives a discharge at the resolution of his/her case, then the automatic stay is lifted. At this time, the creditor can resume or begin foreclosure proceedings against a debtor who has missed mortgage payments prior to filing the Chapter 7. The creditor can also seek relief from the automatic stay prior to your Chapter 7 discharge. Chapter 7 bankruptcy does not allow a debtor to “catch up” overdue mortgage payments within his/her case. Additionally, there is no requirement for the bankruptcy court to work out any repayment plan with the lender. Lenders are not required to modify a mortgage if you file a Chapter 7.

One important thing to consider regarding Chapter 7 is that money may be freed up for you once all allowable debts are consolidated into a Chapter 7 plan. This can, in some circumstances, allow a debtor to pay the lender all of the missed payments owed. Then the debtor must continue to keep the mortgage current and pay the monthly mortgage, both during the Chapter 7 proceeding and after the discharge.

Usually, the better option if you want to keep your home is to file a Chapter 13 bankruptcy. This is a reorganization of your debts, which is a 3-5 year repayment plan on debt owed. Missed mortgage payments do qualify to be part of this repayment plan. This means that you can “catch up” on all overdue mortgage payments, and also not have to pay them all at once. Through a Chapter 13 plan, monthly payments are made to a Chapter 13 Trustee who oversees the case. The debtor must continue to make all ongoing mortgage payments during the entirety of the Chapter 13 case. At the end of the Chapter 13 case (the 3-5 year period), the debtor receives a discharge on all debts that were part of this plan. The debtor keeps his/her home and continues to pay the monthly mortgage payment.

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