Depending on how much equity you have in the home (the value of the home minus the liens) you may be able to exempt it. If it cannot be fully exempt in the Chapter 7 the trustee will sell the home and use the non-exempt portion of the equity to pay creditors. You will get your homestead exemption money to use as a down payment on a new home. If you do not want to lose your home and you have non-exempt equity then you will need to do a Chapter 13 and repay creditors at least as much as they would receive in a Chapter 7. If you do not have the disposable income to fund a plan that pays at least as much as a Chapter 7 then you do not qualify for a Chapter 13. If they sue you and obtain a judgment they can place a lien on your home for the judgment and attempt to foreclose on the lien. In my opinion the best way to handle it is a bankruptcy.