If you believe Chapter 7 bankruptcy is a viable option for you, you might wonder if you can keep your house. Not everyone who files for Chapter 7 holds on to their mortgage. However, it is possible to own your home after the process, depending on your situation.
According to the US Courts, 378,953 individuals and businesses filed for Chapter 7 in 2020. It is a valuable tool for some people to get their debt in order. If you plan your bankruptcy filing correctly, you might be able to keep your house as well.
Equity is not always helpful
If you do not have too much equity in your home and manage to keep up with mortgage payments, you probably can keep it after Chapter 7. In this case, it does not always help you to own your home outright. This is because creditors see your equity as an asset they can use to pay off your debts. New Jersey does not have any statewide exemptions that help protect your equity, but federal homestead exemptions allow for $25,150 worth of equity exemption. If you own property with a spouse, this amount doubles.
Catch up with your mortgage payments
Homeowners who can still pay their mortgage but have not accumulated too much equity have the best chances of keeping their home. Otherwise, you may still lose your home to foreclosure if you cannot bring your payments up to date after filing for Chapter 7.
Homeownership is not guaranteed once you accumulate large amounts of debt. However, bankruptcy can be a pathway to paying off liabilities and getting your finances back on track. Consult with a professional about your options to get out of severe debt.