According to the Crowder Law Center, there are several states that have homestead laws that provide a measure of legal protection from creditors trying to seize a home over unpaid debts. In states with homestead laws, homeowners qualify for an automatic monetary exemption that is determined by the state. Should a creditor file a claim against the debtor's property, the debtor is guaranteed the monetary exemption, and any remaining monies go to satisfying the debt.
The Crowder Law Center also states that homeowners who choose to file a formal declaration of homestead form in their state gain additional protection. For instance, when a creditor wins an abstract of judgment against a debtor, it puts a lien on all property of value, including a home. Without homestead protection the homeowner loses the ability to voluntarily sell the property and control assets from the sale. Homesteading also gives family members benefit protection during a trustee sale. In these cases, without formally declared homestead rights the proceeds from selling the home go towards paying the debt.
It is important to note that the declaration of homestead must be recorded before creditors win a lien. Also, homestead laws do not shield homeowners from paying mortgage debt or home foreclosure. Filing homestead paperwork is relatively simple and does not require the services of a lawyer.