Can bankruptcy stop foreclosure?

Yes. Filing bankruptcy immediately triggers the automatic stay under Section 362, which halts foreclosure proceedings. In Chapter 13, you can then cure mortgage arrears over the plan period while resuming regular payments. Chapter 7 only provides temporary relief -- if you cannot afford the mortgage, the lender can eventually proceed with foreclosure after the stay is lifted.

Can I Keep My House in Bankruptcy?

Q: Can I keep my house in bankruptcy?

In most cases, yes. In Chapter 7, you can keep your home if the equity is protected by your state's homestead exemption and you stay current on mortgage payments. In Chapter 13, you can keep your home while catching up on missed mortgage payments over 3-5 years through the repayment plan. Chapter 13 is specifically designed to help homeowners avoid foreclosure.

Yes, in most cases. Homestead exemptions protect equity in Chapter 7, and Chapter 13 lets you cure mortgage arrears over time.

Keeping your home in Chapter 7

In Chapter 7, you can keep your home if two conditions are met:

Your equity is protected by the homestead exemption. Every state has a homestead exemption that protects a certain amount of equity in your primary residence. If your equity (home value minus mortgage balance) is less than the exemption amount, the Chapter 7 trustee cannot sell your home.
You stay current on mortgage payments. Chapter 7 does not modify your mortgage. If you keep the home, you must continue making payments. If you are behind, the lender can seek relief from the automatic stay and proceed with foreclosure.

Homestead exemption amounts vary widely

Homestead exemptions range from around $5,000 in some states to unlimited in others (Texas, Florida, Kansas, Iowa, and a few others have unlimited homestead exemptions). Some states allow you to choose between state and federal exemptions. The federal homestead exemption is approximately $27,900 (adjusted periodically).

Keeping your home in Chapter 13

Chapter 13 is the stronger tool for homeowners because it lets you:

Stop foreclosure immediately -- The automatic stay halts all foreclosure proceedings at filing
Cure mortgage arrears -- Missed payments are spread over the 3-5 year plan period under Section 1322(b)(5)
Resume regular payments -- While curing arrears, you make current mortgage payments through the plan or directly to the lender
Strip off junior liens -- If your home is worth less than the first mortgage balance, Chapter 13 may allow you to eliminate (strip off) a second mortgage or HELOC entirely, converting it to unsecured debt

Chapter 13 mortgage cure example

Mortgage arrears: $12,000 (6 months behind)
Plan length: 60 months
Monthly arrears payment: $200/month through the plan
Plus: Regular mortgage payment resumes immediately
Result: Arrears cured over 5 years, foreclosure avoided

Chapter 7 vs. Chapter 13 for homeowners

Feature	Chapter 7	Chapter 13
Stop foreclosure?	Temporarily (automatic stay)	Yes, for duration of plan
Cure arrears?	No	Yes, over 3-5 years
Strip junior liens?	No	Yes, if underwater
Equity protection	Homestead exemption amount	All equity (as long as plan is feasible)
Must be current on mortgage?	Yes, to keep home	No, arrears cured through plan

Chapter 13 completion rate matters

While Chapter 13 is powerful for saving homes, according to FJC data, approximately 60-67% of Chapter 13 cases end in dismissal. If your case is dismissed, the automatic stay ends and foreclosure can resume. Realistic budgeting and quality legal representation significantly improve your chances of completing the plan. See Why Do Chapter 13 Cases Fail?

Learn about your options before making a decision.

Before You File

Related resources

Can I Keep My Car? -- Vehicle protection in Chapter 13
Chapter 13 Overview -- Repayment plan basics
Chapter 7 Overview -- Liquidation basics
What Is the Automatic Stay? -- How filing stops foreclosure
How Much Does Bankruptcy Cost? -- Filing fees and expenses

This page provides general information based on publicly available federal court records. It does not constitute legal advice. Consult a licensed attorney for advice on your specific situation.

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