Homes and Mortgages in Bankruptcy

What does this part of bankruptcy cover?

This section covers everything that happens to a place you live in, or owe money on, when you file. That includes a mortgage you are behind on, a second mortgage or junior lien, a foreclosure that has already started, a deficiency the lender may claim after a sale, liens placed by contractors or taxing authorities, a land contract, a lease you rent under, and a manufactured or mobile home.

The legal machinery behind all of it is the same. When you file, an estate is created that includes your legal and equitable interests in property (11 U.S.C. § 541). Your right to keep some of that property comes from exemptions, which are not automatic — you must list the property on Schedule C (Official Form 106C) to claim it (Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals). And a lien is a charge against or interest in property to secure a debt (11 U.S.C. § 101), which is why liens are handled separately from the debts behind them.

• Mortgage debt, arrears, and modification
• Foreclosure timing, reinstatement, redemption, and deficiency judgments
• Junior liens, mechanic's liens, and tax liens on a home
• Contracts for deed, residential leases, and manufactured homes

How do you know which of these applies to you?

Start with what is actually happening, not with what you think you need. Three facts usually sort a person into the right guide: whether a foreclosure has begun, whether you intend to keep the property, and whether the debt is secured by the home or by something else.

If a sale is scheduled, timing controls everything. One court's guidance puts it plainly: if you are filing to save your home from foreclosure, you must do so before the mortgage company completes the foreclosure sale under state law, or you may lose the home (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). That is a state-law deadline, which is why the foreclosure-timeline and state-rules guides exist separately from the mortgage guides.

If you are current and simply want to know whether you can keep the house, the question is about exemptions and equity, not arrears. If you are behind, the question is whether you can cure over time. Those are different guides because they are different mechanisms.

• A sale date is scheduled — read the foreclosure timeline and state rules guides first.
• You are behind but no sale is set — start with curing arrears in Chapter 13.
• You are current and want to keep the home — start with keeping a home in Chapter 7 or 13.
• The lender already sold the property — start with deficiency judgments.

What do these paths have in common?

Four things hold true across every guide in this section, whichever chapter you end up exploring.

First, filing generally triggers an automatic stay. As one court describes it, filing the petition automatically prevents, or stays, debt collection actions against the debtor and the debtor's property; while the stay remains in effect, creditors generally cannot bring or continue lawsuits, make wage garnishments, or make collection calls (Bankr. D. Md. official page — Legal Overview). The stay is not permanent and a secured creditor can ask the court to lift it (11 U.S.C. § 362).

Second, a discharge is personal. It relieves you of liability for dischargeable debts, but it does not eliminate a mortgage or security interest a lender holds in your property (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter).

Third, if you want to keep property securing a debt, you generally must keep paying and keep it insured.

Fourth, exemptions must be claimed. Property you do not list on Schedule C may be sold by the trustee.

Where do the chapters differ most?

The single largest difference is time. Chapter 13 can be used to cure defaults on secured debts, including defaults on home mortgages and motor vehicles (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). Chapter 7 has no equivalent mechanism — it is a liquidation, and past-due payments do not get spread across a plan.

The second difference is the trustee's role in your property. In a Chapter 7 case, the trustee may sell property to pay debts, subject to your right to exempt it (Bankr. S.D. Iowa official guidance). Chapter 13 is a voluntary repayment plan for individuals with regular income (Bankr. E.D. La. official guidance — Chapter 13 Form Packet), and eligibility requires income sufficiently stable and regular to make plan payments (11 U.S.C. § 101).

Cost differs too, though modestly. Chapter 7 carries a $245 filing fee (28 U.S.C. § 1930(a)(1)(A), (f)(1)), a $78 administrative fee, and a $15 trustee surcharge. Chapter 13 carries a $235 filing fee (28 U.S.C. § 1930(a)(1)(B)) and the same $78 administrative fee.

Where should you start?

If a foreclosure sale is scheduled, treat that date as the fixed point and read the foreclosure timeline guide first. Nothing else in this section matters as much as knowing whether the sale has already happened under your state's law.

If there is no immediate deadline, the useful order is: work out what your home is worth against what you owe, find out what your state's homestead exemption covers, then read the keeping-a-home guide for whichever chapter fits your income. Our tools can do the arithmetic on equity, and the state pages carry the exemption figures — we deliberately do not restate those amounts here, because they change and they vary.

A note on who to trust. Federal law requires anyone selling you bankruptcy assistance to give you a written contract specifying what they will do and how much it will cost, and tells you to ask to see it before hiring anyone (11 U.S.C. § 527). Foreclosure-rescue scams target exactly the situation you are in.

• Scheduled sale date: read the foreclosure timeline guide today, not this week.
• No deadline yet: calculate equity, check your state exemption, then pick a chapter guide.
• Unsure which chapter: the chapter comparison tool lays out both sets of criteria.
• Approached by someone offering to save your home: read the scams guide before paying anyone.

Frequently asked questions

Does bankruptcy remove my mortgage?

No. A discharge relieves you of personal liability for dischargeable debts, but it does not eliminate a mortgage or security interest in your property that you granted to a lender (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). One court's official notice states directly that a creditor may still have the right to foreclose a home mortgage after discharge. That is why lien treatment is a separate topic from debt discharge.

Will filing stop a foreclosure sale?

Filing generally triggers an automatic stay, which commonly halts collection actions against you and your property, including lawsuits and garnishments (Bankr. D. Md. official page — Legal Overview). Timing is critical: one court warns that if you are filing to save your home from foreclosure, you must file before the sale is completed under state law. The stay also has limits, and a secured creditor can ask the court to lift it (11 U.S.C. § 362).

Which chapter lets me catch up on missed mortgage payments?

Chapter 13 can be used to cure defaults on secured debts, including defaults on home mortgages and motor vehicles (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). Chapter 7 is a liquidation and has no equivalent mechanism for spreading past-due payments over time. Chapter 13 requires income sufficiently stable and regular to make payments under a plan (11 U.S.C. § 101), so it is not open to everyone.

Can the trustee sell my house?

In a Chapter 7 case, the trustee may sell property to pay your debts, subject to your right to exempt the property or a portion of the sale proceeds (Bankr. S.D. Iowa official guidance). Exemptions are not automatic — you must list the property on Schedule C: The Property You Claim as Exempt (Official Form 106C). What a homestead exemption covers is set by state law, so the figures live on the state pages.

Do I have to keep paying the mortgage during the case?

Under both Chapter 7 and Chapter 13, you generally must pay debts secured by property if you want to keep that property, which commonly means continuing your regular monthly mortgage payments (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). The same guidance notes you must maintain insurance on the home and car and provide the lender proof it is named as an additional loss payee.

What do the two chapters cost to file?

Chapter 7 has a $245 filing fee (28 U.S.C. § 1930(a)(1)(A), (f)(1)), a $78 administrative fee, and a $15 trustee surcharge. Chapter 13 has a $235 filing fee (28 U.S.C. § 1930(a)(1)(B)) and the same $78 administrative fee. Court guidance notes the statute permits installment payment for an individual filing a voluntary or joint case. Attorney fees are separate and are not set by the court.

Does any of this change depending on my state?

The bankruptcy chapters and the automatic stay are federal and work the same everywhere. What varies by state is what your exemptions cover, how foreclosure proceeds, and whether reinstatement, redemption, or a deficiency judgment is available. Those state-specific rules are covered on the state pages and in the state foreclosure rules guide rather than restated here.

Someone offered to stop my foreclosure for a fee. Is that legitimate?

Some are legitimate and some are not, and the pressure of a sale date is exactly what scams exploit. Federal law requires an attorney or bankruptcy petition preparer to give you a written contract specifying what they will do and how much it will cost, and advises you to ask to see the contract before you hire anyone (11 U.S.C. § 527). Our foreclosure-rescue scams guide covers the common patterns.

Sources

• 11 U.S.C. § 541 — Property of the estate · official source
• 11 U.S.C. § 362 — Automatic stay · official source
• 11 U.S.C. § 101 — Definitions · official source
• 11 U.S.C. § 527 — Disclosures · official source
• 28 U.S.C. § 1930(a)(1)(A), (f)(1) — Bankruptcy filing fees
• 28 U.S.C. § 1930(a)(1)(B) — Bankruptcy filing fees
• Bankruptcy Court Miscellaneous Fee Schedule, Item 8
• Bankruptcy Court Miscellaneous Fee Schedule, Item 9
• U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?
• Bankr. D. Md. official page — Legal Overview
• Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals
• Bankr. E.D. La. official guidance — Chapter 13 Form Packet

Related

• Build your personalised roadmap
• Exemptions: what they protect
• The automatic stay
• Chapter 13
• Chapter 7
• Bankruptcy tools and screeners