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Chapter 7: Will A Bankruptcy Trustee Sell My Home?

Many people believe that if they file for Chapter 7 bankruptcy in Missouri or Illinois that they will lose their house. However, this is often not the case at all. First and foremost, if you do not have equity in your home then your trustee will not sell your home as long as you continue to make your mortgage payments on time - and in today's housing market, a large percentage of homeowners do not have significant equity in their houses due to dropping home values.

Secondly, in many state bankruptcy laws, primary residences are exempt from being liquidated during Chapter 7 bankruptcy proceedings. That is, if you continue to make your mortgage payments during and after the bankruptcy process, you can keep your house. A vacation home or other large assets may not be exempt from liquidation, however.

If your house does have a certain amount of equity, you may want to consider Chapter 13 reorganization bankruptcy instead of Chapter 7 liquidation bankruptcy. Chapter 13 bankruptcy allows you to keep your home (as long as you continue to pay your mortgage in a timely fashion) and also reorganizes your other debts in order to make them more manageable.

Some people who declare bankruptcy elect to sell their home - simply in order to simplify their finances, get rid of an unreasonably expensive mortgage, or downsize their expenses. Perhaps the best way to decide on a workable plan for bankruptcy is to speak to an experienced bankruptcy lawyer in your state.

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