Filing for Chapter 7 bankruptcy can feel overwhelming, especially when you’re worried about losing the things that matter most. One of the biggest concerns for many people is whether they can keep their homes.
The good news is that filing for bankruptcy doesn’t always mean you have to give up your house. Understanding the factors that influence the decision can help you prepare for the path ahead.
What to know
Chapter 7, commonly known as the liquidation chapter, involves selling non-exempt assets to repay creditors, providing immediate debt relief. However, whether you can keep your home in Chapter 7 bankruptcy usually depends on your state’s exemption laws.
Most states allow you to protect a certain amount of equity in your home through a “homestead exemption.” Homestead laws allow property owners to protect a portion of their primary residence from creditors during bankruptcy. These protections can reduce financial pressure and help to prevent homelessness for struggling homeowners. Ohio homestead laws let homeowners exempt up to $25,000 of their home’s value from property taxes. For example, if your home is worth $100,000, you’d only pay taxes on $75,000, saving you around $400 a year on average.
Another important factor is your mortgage. If you kept your house through the bankruptcy process, you can keep your home after your bankruptcy case ends, as long as you continue to pay the mortgage. If you are behind on your payments and cannot catch up, the lender may still foreclose, even if your bankruptcy discharges your other debts. Staying current on your mortgage is often key if you want to keep your property after filing.
If you’re considering Chapter 7 bankruptcy and want to make sure you’re protecting your assets, it’s important to get experienced guidance. Speaking with a professional who understands the process can help you make the right decisions for your future.