Will the trustee sell my house in Chapter 7?

A Chapter 7 trustee may sell property to pay creditors, subject to your right to exempt the property or a portion of the sale proceeds. In practice a trustee is looking at equity — value minus mortgages and liens. Where the equity is fully covered by an available exemption, there is generally nothing for a sale to produce for creditors. Exemptions must be claimed on Schedule C to apply.

Does Chapter 7 wipe out my mortgage?

No. A discharge relieves you of personal liability on many pre-bankruptcy debts, but court guidance states plainly that liens on property may still be enforced after discharge and that a creditor may have the right to foreclose a home mortgage. The mortgage lien stays attached to the house. That is why keeping the home generally means continuing to make the regular payments.

Do I have to reaffirm the mortgage to keep my home?

Chapter 7 filers state their intentions about property securing a debt on the Statement of Intention (Official Form 108), signed under penalty of perjury. What courts consistently emphasize is the payment requirement: under both Chapter 7 and Chapter 13, secured debts must be paid if you want to keep the property. How a particular lender and district handle reaffirmation is worth asking a local attorney about directly.

I'm current on my mortgage. Does that change anything?

Being current removes the arrears problem, which is the harder half of the analysis. It leaves the equity question. If your equity is covered by an available exemption and you keep making payments and maintaining insurance, the usual pressure points are absent. Being current does not by itself protect non-exempt equity — a trustee evaluates equity independently of payment history.

Which state's exemptions apply if I moved recently?

Under 11 U.S.C. § 522(b)(3)(A), the applicable state or local exemption law is that of the place where your domicile was located for the 730 days immediately preceding the petition date. If your domicile was not in a single state for that whole period, the statute points to where you were domiciled during the 180 days preceding that 730-day period. Recent moves change the answer.

How is home equity calculated for bankruptcy?

Value minus what is secured against it. The Alaska court's packet works the example: a $300,000 home less a $200,000 first mortgage leaves $100,000 of remaining value; a $150,000 second mortgage against that leaves $50,000 as the unsecured portion of the second mortgage. Under 11 U.S.C. § 522(a)(2), "value" means fair market value as of the date the petition is filed.

Should I file Chapter 13 instead if I'm behind on payments?

It is a common comparison, and the reason is specific: court guidance notes that Chapter 13 can be used to cure defaults on secured debts, including home mortgage defaults. Chapter 7 does not provide that curing mechanism. Which chapter fits depends on income, equity, arrears and what you are trying to keep — the chapter comparison is worth walking through with an attorney.

Homes & mortgages

Keeping a Home in Chapter 7 Bankruptcy

In Chapter 7, a home is generally kept when two things line up: the equity is covered by an available exemption, and the mortgage is being paid. Exemptions come from state or federal law under 11 U.S.C. § 522, and a discharge does not remove a mortgage lien. Non-exempt equity is what typically puts a house at risk of sale.

Key points

A Chapter 7 trustee looks at equity, not at the house itself, and equity is what the property is worth minus the mortgages and liens against it.
Exemptions come from state or federal law under 11 U.S.C. § 522, and they are not automatic — property must be listed on Schedule C to be claimed as exempt.
A discharge cancels personal liability on many debts, but liens on property survive, so a mortgage lender can still foreclose if payments stop.
Court guidance is consistent that to keep property securing a debt, the regular payments generally have to keep being made.
A house already in foreclosure raises timing questions that Chapter 7 handles differently from Chapter 13, and that difference often drives the chapter decision.

If you own a home and you are thinking about Chapter 7, the question underneath every other question is usually the same one: will I lose the house. The answer turns on arithmetic and on paperwork, not on how the case feels. This page walks through what a trustee actually looks at, what the automatic stay does and does not do to a mortgage, and where the decision gets genuinely hard.

How does keeping a home in Chapter 7 actually work?

Two separate things decide the outcome, and it helps to keep them apart.

The first is equity. When you file, your property becomes part of the bankruptcy estate, and a Chapter 7 trustee may sell property to pay creditors — subject to your right to exempt the property or a portion of the sale proceeds (U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy). Court guidance describes exemptions as what may enable you to keep a home, a car, clothing and household items. Equity is the value of the home minus the mortgages and liens recorded against it. A house with little or no equity is generally of little use to a trustee, because a sale would not produce money for creditors after the lender is paid.

The second is the mortgage itself. A discharge relieves you of personal liability on many debts, but court guidance is explicit that liens on property may still be enforced after discharge — a lender may still foreclose a home mortgage (U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy). Both parts have to work.

Equity question: is the equity covered by an exemption you can claim?
Mortgage question: are the payments current, and can they keep being made?
The two are independent — a fully exempt home can still be foreclosed if payments stop.

What changes the answer for one household and not another?

A handful of facts move this more than anything else.

How much the home is worth relative to what is owed is the first. The Alaska court's filing packet illustrates the arithmetic plainly: a $300,000 home with a $200,000 first mortgage leaves $100,000 of remaining property value, and a $150,000 second mortgage against that leaves $50,000 as an unsecured portion of the second mortgage. The same subtraction is what determines whether there is equity a trustee could reach.

Which exemptions apply is the second, and that depends on where you have lived. Under 11 U.S.C. § 522(b)(3)(A), the applicable state or local exemption law is the law of the place where your domicile was located for the 730 days immediately preceding the filing — with a further rule for people who moved during that period. A recent move can therefore mean a different state's exemptions than the one you live in now.

Whether the mortgage is current is the third, and whether you are married and how title is held can matter as well, because § 522(b)(3)(B) addresses interests held as a tenant by the entirety or joint tenant.

What a trustee weighs versus what a mortgage lender weighs
Fact	Matters to the trustee	Matters to the mortgage lender
Home value minus liens (equity)	Yes — this is the core question	Indirectly
Exemption claimed on Schedule C	Yes — determines what is beyond reach	No
Whether payments are current	Generally no	Yes — this is the core question
Domicile for the 730 days before filing	Yes — sets which exemption law applies	No
Discharge of personal liability	No	Lien survives regardless

What does federal law say about exemptions and the stay?

Four provisions do most of the work here.

11 U.S.C. § 522(b)(1) lets an individual debtor exempt property from the estate, choosing either the federal list or the state-and-other-federal-law list — and § 522(b)(2) notes that the federal list is unavailable where applicable state law does not authorize it. Section 522(a)(2) defines "value" as fair market value as of the date the petition is filed, which is why the valuation date matters.

Section 362(a) is the automatic stay. Filing operates as a stay of, among other things, any act to obtain possession of property of the estate or to exercise control over it, and any act to create, perfect or enforce any lien against property of the estate (§ 362(a)(3), (a)(4)). That is what commonly pauses a foreclosure.

The stay is not permanent. Under § 362(d) a secured creditor can ask the court for relief, and § 361 describes the "adequate protection" a court may require — periodic cash payments, a replacement lien, or other relief giving the creditor the indubitable equivalent of its interest.

§ 522(b)(1) — the debtor elects one exemption scheme, not both
§ 522(a)(2) — value is fair market value as of the petition date
§ 362(a)(3)–(4) — the stay reaches acts against estate property and liens
§ 361 — what adequate protection can look like if a creditor seeks stay relief

Where do state and local rules change this?

The federal framework is uniform; the numbers are not. Under 11 U.S.C. § 522(b)(3)(A), the exemptions available to you may come from state or local law, and § 522(b)(2) allows a state to make the federal exemption list unavailable to its residents. Some states permit a choice between the federal and state lists; others require the state list. The homestead figure itself — how much home equity an exemption covers — is set by that applicable law and varies widely.

We publish verified exemption amounts on the state pages rather than restating them here, because a figure quoted for the wrong state is worse than no figure at all. Your state hub is the place to look.

Local court practice adds another layer. Districts publish their own local rules and procedures, and some address residence-related motions directly — for example, N.D. Fla. LBR (2024 consolidated) sets out a specific procedure for motions to determine secured status and strip a junior lien on a debtor's principal residence in Chapter 13 cases. Timing rules can differ from district to district.

Whether you may choose federal exemptions at all is a state-law question (§ 522(b)(2))
Which state's law applies depends on the 730-day domicile rule (§ 522(b)(3)(A))
Local rules and forms vary by district — see your court's own published guidance

What does this look like in practice?

Court guidance is direct about the practical requirement. Under both Chapter 7 and Chapter 13, debts secured by property must be paid if you want to keep the property — most commonly, that means continuing regular monthly mortgage payments, maintaining insurance on the home, and giving the lender proof that it is named as an additional loss payee (U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter). The same guidance notes that if a secured creditor refuses your attempted payments, you should not spend that money; hold it until the trustee or court can address the situation.

Foreclosure timing is where the two chapters diverge sharply. The Arizona court warns that if you are filing to save a home from foreclosure, you must do so before the mortgage company completes the foreclosure sale under state law, or you may lose the home. It also notes that Chapter 13 can be used to cure defaults on secured debts, including home mortgage defaults — a curing mechanism Chapter 7 does not provide.

That single difference is why households behind on a mortgage often end up comparing the two chapters rather than assuming Chapter 7.

Keep paying the mortgage and keep insurance in force if the goal is keeping the home
Filing after a completed foreclosure sale may come too late
Chapter 13 offers a cure mechanism for mortgage arrears; Chapter 7 does not

What documents and information are involved?

Homeownership shows up across several of the standard individual forms.

Secured claims — mortgages and liens — go on Schedule D: Creditors Who Have Claims Secured by Your Property (Official Form 106D); the unsecured portion of an undersecured second mortgage is reported differently, as the Alaska packet's worked example shows. Exemptions go on Schedule C: The Property You Claim as Exempt (Official Form 106C), and court guidance is emphatic that exemptions are not automatic — if you do not list the property, the trustee may sell it and pay all of the proceeds to creditors (Bankr. S.D. Iowa official guidance).

Chapter 7 filers also complete a Statement of Intention for Individuals Filing Under Chapter 7 (Official Form 108), which is where a debtor states what they intend to do about property securing a debt, signed under penalty of perjury. Prior foreclosure activity is disclosed on the Statement of Financial Affairs (Official Form 107), which asks whether property was repossessed, foreclosed, garnished, attached, seized or levied within the year before filing.

Schedule D (Form 106D) — mortgages and other secured claims
Schedule C (Form 106C) — the exemptions you claim; omission can be costly
Form 108 — Statement of Intention as to property securing a debt
Form 107 — discloses foreclosure or seizure in the prior year

What should you ask a lawyer about your house?

Bring the numbers, not just the worry. A current mortgage statement, any second mortgage or home equity line, a realistic sense of value, and a note of when you moved to your current state will let an attorney answer most of this in one sitting.

Questions worth asking directly: how much equity do I actually have after every lien; which state's exemption law applies given where I have lived for the past two years, and does that state allow the federal list; is my equity covered, and what happens to the excess if it is not; if I am behind on payments, does Chapter 7 do anything about the arrears, or does the comparison point toward Chapter 13; and what does the lender have to do to seek relief from the automatic stay.

Court guidance itself recommends having an attorney review both the decision to file and the choice of chapter (U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy). This is one of the clearer cases for that advice, because the cost of getting the equity math wrong is the house.

Bring: mortgage statements, lien payoffs, an honest value estimate, your address history
Ask about the equity calculation and the exemption that would apply to it
Ask how mortgage arrears change the chapter comparison

Frequently asked questions

Will the trustee sell my house in Chapter 7?: A Chapter 7 trustee may sell property to pay creditors, subject to your right to exempt the property or a portion of the sale proceeds. In practice a trustee is looking at equity — value minus mortgages and liens. Where the equity is fully covered by an available exemption, there is generally nothing for a sale to produce for creditors. Exemptions must be claimed on Schedule C to apply.
Does Chapter 7 wipe out my mortgage?: No. A discharge relieves you of personal liability on many pre-bankruptcy debts, but court guidance states plainly that liens on property may still be enforced after discharge and that a creditor may have the right to foreclose a home mortgage. The mortgage lien stays attached to the house. That is why keeping the home generally means continuing to make the regular payments.
Do I have to reaffirm the mortgage to keep my home?: Chapter 7 filers state their intentions about property securing a debt on the Statement of Intention (Official Form 108), signed under penalty of perjury. What courts consistently emphasize is the payment requirement: under both Chapter 7 and Chapter 13, secured debts must be paid if you want to keep the property. How a particular lender and district handle reaffirmation is worth asking a local attorney about directly.
I'm current on my mortgage. Does that change anything?: Being current removes the arrears problem, which is the harder half of the analysis. It leaves the equity question. If your equity is covered by an available exemption and you keep making payments and maintaining insurance, the usual pressure points are absent. Being current does not by itself protect non-exempt equity — a trustee evaluates equity independently of payment history.
Does filing stop a foreclosure sale?: Filing operates as an automatic stay of acts to obtain possession of or exercise control over property of the estate (11 U.S.C. § 362(a)(3)). Court guidance warns that if you are filing to save a home from foreclosure, you must file before the foreclosure sale is completed under state law. The stay is also not permanent — a secured creditor may seek relief from it under § 362(d).
Which state's exemptions apply if I moved recently?: Under 11 U.S.C. § 522(b)(3)(A), the applicable state or local exemption law is that of the place where your domicile was located for the 730 days immediately preceding the petition date. If your domicile was not in a single state for that whole period, the statute points to where you were domiciled during the 180 days preceding that 730-day period. Recent moves change the answer.
How is home equity calculated for bankruptcy?: Value minus what is secured against it. The Alaska court's packet works the example: a $300,000 home less a $200,000 first mortgage leaves $100,000 of remaining value; a $150,000 second mortgage against that leaves $50,000 as the unsecured portion of the second mortgage. Under 11 U.S.C. § 522(a)(2), "value" means fair market value as of the date the petition is filed.
Should I file Chapter 13 instead if I'm behind on payments?: It is a common comparison, and the reason is specific: court guidance notes that Chapter 13 can be used to cure defaults on secured debts, including home mortgage defaults. Chapter 7 does not provide that curing mechanism. Which chapter fits depends on income, equity, arrears and what you are trying to keep — the chapter comparison is worth walking through with an attorney.

Sources

11 U.S.C. § 522 — Exemptions · official source
11 U.S.C. § 362 — Automatic stay · official source
11 U.S.C. § 361 — Adequate protection · official source
U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy
U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?
Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals
N.D. Fla. LBR (2024 consolidated)

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Last reviewed July 26, 2026 · Sources verified July 26, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.

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