Which Bankruptcy Fits Me?
Feb. 22, 2016
If you own your own home free and clear of all liens then you are probably going to want to do a Chapter 13 in order to keep the home. There is a rule that creditors must receive at least as much in a Chapter 13 as they would in a hypothetical Chapter 7. If you did a Chapter 7 you would be able to take a homestead exemption of either $100K or $175K depending on your age. The difference between the value of the home and the exemption would be considered non-exempt equity which would be realized by a Chapter 7 trustee who would sell the property to pay the creditors (you would receive your exemption amount which you are expected to use to purchase another property). This all assumes this is your primary residence and not an investment property. If it is an investment property you probably cannot exempt it at all. If you have the disposable income to fund a plan and pay the non-exempt equity to unsecured creditors you can file a Chapter 13 and keep the house. If you do not have the disposable income to fund a plan then you have to file a Chapter 7 and risk losing the house to a Trustee sale.