Filing for Chapter 13 bankruptcy allows property owners to keep their homes, unlike filing for Chapter 7 bankruptcy where the owner forfeits all non-exempt assets, notes HowStuffWorks. However, some states exempt houses from assets that must be liquidated under Chapter 7 bankruptcy.Continue Reading
Chapter 13 bankruptcy, also called a wage earner's plan, allows people to keep their homes while making installments payments to creditors over the course of three to five years, notes the Administrative Office of the U.S. Courts. People who file for Chapter 13 bankruptcy can stop foreclosure proceedings and make past due mortgage payments over time. They may lose their houses during their bankruptcy terms if they fail to make continued mortgage payments. People can only file for Chapter 13 bankruptcy if they meet debt guidelines based on the consumer price index.
A Chapter 7 bankruptcy calls for a liquidation of non-exempt assets, repayment to creditors and discharge of any remaining debts, notes HowStuffWorks. People must pass a means test in order to qualify for Chapter 7 bankruptcy and cannot file if their current monthly income is greater than the median for families of the same size in their states. Homestead exemptions, and amounts that people are allowed under the exemptions, vary significantly by state.Learn more about Debt Law