If I’m Current on My Mortgage, Can I Keep My House through Chapter 7 Bankruptcy?


As a Loveland, Colorado bankruptcy attorney, I field many questions from clients who are unsure about the bankruptcy process. With each question, I carefully take the time to explain the options in relation to their circumstances, and help them to make the choice that is right for their financial situation.

A frequent question I receive is in regards to home ownership: “If I’m current on my mortgage, can I keep my home in Chapter 7 bankruptcy?”

The answer in most circumstances is yes—if all of your equity in the home is exempt. The next question, of course, is, “What is exempt equity?”

In researching how to best answer this question for clients, I recently came upon a helpful page from Nolo. Nolo indicates that, although the Chapter 7 bankruptcy trustee may sell some categories of your property to pay unsecured debtors, you are allowed to keep a certain amount (and certain types, of course) of property. The amount of property that you are allowed to keep through your Chapter 7 bankruptcy is called “exempt property.”

Bankruptcy law in Colorado, like many states, allows you to keep a certain amount of equity in your home. This is called the “homestead exemption.” Under the Colorado homestead exemption system, you may exempt up to $60,000 of your home or other property covered by the exemption.

If all the equity in your property is exempt, the Chapter 7 bankruptcy trustee cannot use it to pay unsecured creditors. Because of this, they would have no reason to sell your home as part of the bankruptcy.

If you have more questions about Chapter 7 bankruptcy in Colorado, your home, or your financial situation, contact an experienced Loveland bankruptcy attorney today.


Photo Credit: Flickr User J. Stephen Conn via Creative Commons

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