Will I Lose My House?

When considering whether or not to file for bankruptcy in Arizona, one concern ranks high on many potential applicant’s lists: Will my home be in jeopardy? Unfortunately, there is no one easy way to answer this but our Phoenix bankruptcy lawyers can help you find the answer related to your particular financial situation. There are, however, factors to keep in mind when proceeding which may help you determine whether or not filing for bankruptcy could affect your home.

Bankruptcy vs. Foreclosure

Initially, bankruptcy works to do everything in its power to keep you in your home. If any foreclosures are in process, filing for bankruptcy enacts an automatic stay that will stop them immediately. This means you can rest assured that, at least at the beginning, your home is safely in your hands. But what about later? If you are filing for Chapter 7 bankruptcy, your assets go into the hands of the courts, and a trustee is appointed to delegate how they are distributed.

If your home is on the list for possible distribution, even if the bankruptcy initially prevented it from being foreclosed upon, it could be taken as a way to pay your debts. That said, there are multiple ways to safeguard against the sale of your home by a trustee and an accomplished Phoenix bankruptcy attorney can help you identify those ways. Moreover, it is highly possible that if your home had already entered foreclosure or was nearly doing so, a continual default on your payments would eventually result in the loss of your home regardless of whether a bankruptcy was in place.

Your Home as Collateral

When you entered into a mortgage, you essentially granted yourself a secured debt. A secured debt is one backed by collateral, and in the instance of a mortgage, your home is just that. The bank gave you a certain amount of money, and to secure its investment, it kept your home as a measure of protection for its investment in case something went wrong with your payments. This is why foreclosure can become an issue. If you have fallen behind on your mortgage payments, it is within the rights of the bank to repossess your house to make up for the delinquency.

Bankruptcy in Arizona often can still this procedure. While your home does act as collateral, there are certainly ways bankruptcy can stop foreclosure and prevent you from losing your home during the process. If your debts can be paid without the need for your home’s liquidation, the trustee will often opt to help you keep your home.


During bankruptcy, you need not be rendered powerless against your creditors. If your primary goal is to keep your home, there are a number of ways your Phoenix bankruptcy lawyer can help you accomplish this. In Arizona, homes are exempt from liquidation up to $150,000. This means if your home is worth $250,000 only $100,000 of that would be usable as repayment for a debt. While it is by no means a guarantee that exemption will be granted, attempting to secure bankruptcy is a way to ensure your home remains yours after the bankruptcy has concluded.

Chapter 13

Only Chapter 7 bankruptcy carries with it the threat of home loss. Filing for Chapter 13 bankruptcy instead allows you to retain all of your possessions, and filing for it will simply install a long-term payment plan coupled with an amount of debt discharge to free you of what you owe.

Sometimes your home is a necessary loss during an Arizona Chapter 7 bankruptcy proceeding; however, in this worst case scenario, you will still emerge debt-free. There are so many ways to protect your home, though, that losing your property can often be avoided if you seek the counsel of a skilled and experienced bankruptcy attorney in Phoenix, AZ. Relying on the advice of a qualified team can make a significant difference in the liquidation of your assets.