Can I Keep My Home If I File Chapter 7 Bankruptcy?

Worried that filing Chapter 7 bankruptcy means losing your home? Yes—most Texans can keep their home in Chapter 7 because the state’s generous homestead exemption protects their primary residence throughout the bankruptcy process.

At Pelley Law Office, we help clients file Chapter 7 bankruptcy while keeping their homes.

How Does the Texas Homestead Exemption Protect My Home?

Texas offers one of the most generous homestead exemptions in the country, protecting your primary residence regardless of its value. Urban homesteads on 10 acres or less are fully exempt from liquidation in Chapter 7 bankruptcy. Rural homesteads enjoy even greater protection, covering up to 100 acres for families or 50 acres for single individuals.

This means the bankruptcy trustee generally cannot force you to sell your home to pay creditors, even if it has substantial equity. The homestead exemption applies to houses, condominiums, mobile homes, and any property serving as your primary residence. Most Texas homeowners can keep their homes while eliminating credit card debt, medical bills, and other unsecured debts.

What Are the Requirements for Keeping My Home in Chapter 7?

While the homestead exemption protects your home’s equity, you must meet certain conditions to keep your property through Chapter 7. You need to continue making mortgage payments before, during, and after bankruptcy. Chapter 7 removes personal liability for the mortgage debt but does not remove the lender’s lien on your home.

If mortgage payments are behind, your lender can still foreclose after discharge. The automatic stay temporarily halts foreclosure when you file, but it ends once your case concludes. You also must continue paying property taxes and homeowner’s insurance, as bankruptcy does not remove these obligations. Most Texas homeowners who stay current on payments successfully keep their homes.

What Happens to Home Equity in Chapter 7 Bankruptcy?

Texas’s unlimited homestead exemption means your home equity does not usually affect your case. Whether you have $10,000 or $500,000 in equity, it is generally protected. This differs from states with limited exemptions, where high-equity homes may be at risk.

However, the exemption only applies to your primary residence. Second homes, vacation properties, rental units, or investment properties are not protected and may be sold to pay creditors unless other exemptions apply.

If you are behind on mortgage payments, Chapter 7 will not help you catch up. In such cases, Chapter 13 bankruptcy may better protect your home while addressing arrears. Our Texas bankruptcy attorney at Pelley Law Office can advise which option best suits your situation.

Talk to a Texas Bankruptcy Lawyer About Keeping Your Home

Don’t let fear of losing your home prevent you from getting debt relief. Pelley Law Office helps Texas residents file Chapter 7 bankruptcy while keeping their homes. We review mortgage status, calculate home equity, and ensure the homestead exemption applies. Most clients keep their homes while eliminating overwhelming qualifying debt. Call (214) 560-1919 or contact us online to speak with our Texas bankruptcy attorney for a free consultation about Chapter 7 bankruptcy and your home.

Contact Our Texas Bankruptcy Law Firm For Help Today

If you’re facing bankruptcy in Texas, we’re here to help. Contact the experienced bankruptcy lawyers at Pelley Law Office, L.L.P., today to schedule a free consultation.

We proudly serve Plano, Dallas, Sherman, and the surrounding areas.

Pelley Law Office L.L.P. – Plano Office
Address: 1312 14th St, Plano, TX 75074
Phone: (972) 608-0335
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.0180322,-96.6952916,863

Pelley Law Office L.L.P. – Sherman Office

Address: 905 N Travis St, Sherman, TX 75090
Phone: (903) 813-4778
Hours: 24/7

Our firm is located near you. Find us with our GeoCoordinates: 33.6445846,-96.6113141,857