Can a debtor still file a Chapter 7 if they own a house?
The answer is an absolute yes. You can file a case no matter what you own. A debtor can claim a very good portion of their equity under the homestead exemption. If the real estate is owned by two debtors, then two homestead exemptions can be claimed. Moreover, both debtors can also have their wild card exemptions applied to the equity in the home. In simple terms, an individual debtor can have about $20,000 worth of equity in their homes, and still qualify for a Chapter 7, and keep their homes. In a joint filing between spouses, the debtors can keep about $40,000 of equity in their homes. Another key point is that there is a cost of sale factor that is considered into assessing how much equity a debtor(s) has. Most trustees factor in a 10% cost of sale factor in determining that amount of equity that a debtor has. A Chapter 7 bankruptcy for debtor who owns a home is more involved than a straight credit card Chapter 7. The legal fees are higher. Moreover, in many cases that trustee will
