What happens to my house in a chapter 7 bankruptcy?
It is rare for a person to lose a house in an Arizona chapter 7 bankruptcy case. That’s because the exemption for most people is $250,000 of your house’s equity (A.R.S. § 33-1101). If your home’s value, less any mortgages, is $250,000 or less, there’s a good chance you will get to keep your home. You do have to live in the house to claim the exemption.
If the equity is higher than $250,000, you could lose the house in a chapter 7. In that case, you may want to pursue a chapter 13 bankruptcy, which would allow you to keep your house. If you are behind on your mortgage payments, you could also lose your house in a chapter 7. A chapter 13 bankruptcy would allow you to keep your house, continue to make your current mortgage payments, and catch up the delinquent payments during your chapter 13 plan repayment.
As your home is probably your most important asset, it is important to learn how a bankruptcy could affect your right to keep it. Before moving ahead, it is best to speak to an experienced Arizona chapter 7 bankruptcy lawyer to understand your rights.