Chapter 7 · Beverly Hills
Can I Keep My House in Chapter 7?
Yes, you can keep your house in Chapter 7 if your equity is protected by the California homestead exemption and your mortgage is current. If you have more equity than the exemption covers, or you are behind on payments, Chapter 13 is often the safer choice. Call (310) 362-9071 and we will work through your home's numbers at a free consultation.
- Equity is what your home would sell for minus all liens on it.
- Los Angeles County homeowners get the top homestead amount.
- Chapter 7 does not let you catch up on missed mortgage payments.
At a glance
How the California homestead exemption protects your house
Whether you can keep your house in Chapter 7 depends mostly on the California homestead exemption. It protects a set amount of equity in the home you live in.
Under System 1, the homestead amount is the county's median home sale price from the year before, with a floor and a cap that rise each year with inflation. For 2026, that range is about $372,000 to about $744,000. The state does not publish the adjusted figure, so these are estimates based on the inflation formula in the law. Los Angeles County is at the top amount because its median home price is far above the cap.
Under System 2, the home exemption is much smaller: $36,750, plus the $1,950 wildcard if you use it on the home (April 1, 2025 amounts). Our page on the California homestead exemption covers the rules in more detail.
One more limit applies if you bought your home within the last 1,215 days (about three years and four months) before filing. Federal law can cap how much equity you protect in that case. We check your purchase date.
Equity math, including the cost of a sale
A trustee only sells a home if the sale would bring money for your creditors. To decide, the trustee looks at what a sale would net after paying everything ahead of creditors. That includes the mortgage, other liens, agent fees, closing costs and your exemption.
These are made-up round numbers to show the math.
| Step | Amount |
|---|---|
| What the home would sell for today | $1,400,000 |
| Minus first mortgage | $650,000 |
| Minus home equity line | $50,000 |
| Minus estimated agent fees and closing costs | $90,000 |
| Equal: net equity | $610,000 |
| Homestead exemption (2026 estimate, LA County) | about $744,000 |
| Left for creditors | $0 |
In this example, the home is safe in Chapter 7. If the net equity were well above the exemption, the trustee could sell the home, pay you the exemption in cash and use the rest for creditors. In that case, Chapter 13 bankruptcy lets you keep the home and pay creditors over time instead.
Value matters. We look at recent sales near you, not a website estimate. The Chapter 7 trustee may get an opinion of value too.
You must be current on your mortgage
Chapter 7 wipes out your personal duty to pay the mortgage. It does not remove the lender's lien. If you want to keep the house, you must keep making the payments.
If you are behind, Chapter 7 does not give you a way to catch up over time. The automatic stay pauses a foreclosure, but the lender can ask the court to lift it. In Chapter 7, that often happens within weeks.
Chapter 13 is built for this. It lets you pay missed mortgage payments over up to 5 years while you make your regular payments. See our pages on curing mortgage arrears in Chapter 13 and stopping foreclosure.
System 1 vs System 2 for homeowners
California makes you choose one exemption system for everything you own. You cannot mix them.
- System 1 has the large homestead exemption. Most homeowners with real equity use it.
- System 2 protects only $36,750 in a home, but it has a wildcard you can use on cash, a car or other property. It can fit homeowners with little or no equity who need to protect other things.
If you are married and filing alone, using System 2 requires both spouses to waive System 1 in writing. See System 1 vs System 2 for a side-by-side comparison.
Surrender, and why reaffirming a mortgage rarely makes sense
Surrender. If the house costs more than you can afford, you can let it go. You move out, and the lender forecloses or agrees to a short sale. Any balance you still owe on the loan after the sale is usually wiped out in your discharge.
Reaffirmation. A reaffirmation agreement makes you personally liable on the mortgage again after bankruptcy. If you later fall behind and the home is sold for less than you owe, you could owe the difference. Many lenders let you stay in the home as long as you keep paying, without a reaffirmation. For most homeowners, reaffirming a mortgage adds risk with little benefit. Some lenders stop sending monthly statements after a discharge, so keep your own records of payments. See reaffirmation agreements.
Common mistakes homeowners make
- Using a website value. Online estimates can be far off. The trustee will use real sales data.
- Forgetting the second loan. Count every lien, including home equity lines and tax liens.
- Filing Chapter 7 while behind. If you want to save the house, Chapter 13 is usually needed.
- Adding or removing names on title before filing. Transfers can be undone and can hurt your case.
- Refinancing to pull out cash right before filing. The trustee will ask where the money went.
For the rest of the process, see our Chapter 7 bankruptcy overview.
What it costs
- Chapter 7: flat attorney fee from $1,200, plus the $338 court filing fee
- Chapter 13: attorney fee quoted in writing, and part of it can be paid through the plan
- Payment plans are available, and the first consultation is free
More on Chapter 7 bankruptcy
- Chapter 7 bankruptcy in Beverly Hills
- California Median Income Figures for the Means Test
- What Debts Are Wiped Out in Chapter 7
- Debts Chapter 7 Will Not Discharge
- Can I Keep My Car in Chapter 7?
- Can I Keep My House in Chapter 7?
- The Chapter 7 Timeline, From Filing to Discharge
- What the Chapter 7 Trustee Looks For
- Filing Chapter 7 With No Income or Between Jobs
- Filing a Second Chapter 7: The Eight-Year Rule
- Chapter 7 for Married Couples: Filing Alone or Together
- What Happens at the 341 Meeting of Creditors
- Redeeming a Car in Chapter 7
- Means test evaluation
- Reaffirmation agreements
House questions in Chapter 7
Can I keep my house in Chapter 7 if I have equity?
Yes, you can keep your house in Chapter 7 if your equity is within the homestead exemption. In Los Angeles County, the 2026 homestead amount is estimated at about $744,000. Equity above that can put the home at risk.
Can I keep my house in Chapter 7 if I am behind on my mortgage?
You can keep your house in Chapter 7 while behind only if you can catch up with the lender on your own. Chapter 7 has no plan to repay missed payments. Chapter 13 lets you catch up over time.
Do I have to reaffirm my mortgage to keep my house?
No, most people do not have to reaffirm their mortgage to keep their house. Many lenders accept payments without it. Reaffirming can leave you owing money if the home is sold later.
What happens to a second mortgage in Chapter 7?
A second mortgage stays attached to your house in Chapter 7, even if the home is worth less than the first loan. Your personal liability is discharged, but the lien remains. Chapter 13 can sometimes remove a second loan that has no equity behind it. See lien stripping in Chapter 13.
Free consultation
Find out if your house is safe
Call (310) 362-9071 or send the form. Bring your mortgage statements and we will check your equity against the homestead exemption for free.
Law Offices of John Asuncion9454 Wilshire Blvd., Penthouse Floor
Beverly Hills, CA 90212
(310) 362-9071
Monday to Friday, 9 a.m. to 6 p.m.