What Happens to My Home If I File for Bankruptcy in New Jersey?

June 19, 2025

What Happens to My Home If I File for Bankruptcy in New Jersey?

Filing for bankruptcy can be an overwhelming process, especially when you're worried about losing your home. At Carroll Law Firm, P.C., we assist individuals throughout New Jersey in navigating bankruptcy with clarity and confidence. One of the most common questions we hear is, “What happens to my home if I file for bankruptcy?” The answer depends on several key factors, including the type of bankruptcy filed, the amount of equity in your home, and whether you’re current on your mortgage.


Chapter 7 vs. Chapter 13 Bankruptcy


Chapter 7 Bankruptcy:


 This is often referred to as "liquidation" bankruptcy. A trustee may sell non-exempt assets to repay creditors. However, many filers can protect their home using the New Jersey homestead exemption—if there's little or no equity in the property. If you're current on your mortgage and your home equity falls within exemption limits, you may be able to keep your home.


Chapter 13 Bankruptcy:


 Chapter 13 is a reorganization plan that allows you to catch up on missed mortgage payments over a 3- to 5-year repayment period. As long as you maintain your payments under the plan, your home is generally protected from foreclosure—even if you're behind when you file.


Homestead Exemption in New Jersey


New Jersey does not offer a state-specific homestead exemption. However, federal bankruptcy exemptions are available and can protect up to a certain amount of home equity (over $27,000 for individuals and more than $54,000 for married couples filing jointly as of 2025). If your equity falls within these limits, your home is more likely to be protected in Chapter 7.


What If I’m Facing Foreclosure?


Bankruptcy triggers an automatic stay, which temporarily halts foreclosure proceedings. This can provide critical breathing room to explore repayment or legal defense options. In Chapter 13, you can use the repayment plan to catch up on missed payments and avoid foreclosure altogether.


Keeping Your Home Requires Planning


Whether or not you keep your home often comes down to:


  • The amount of equity you have
  • Your ability to continue making mortgage payments
  • The type of bankruptcy you file
  • How exemptions apply to your situation


It’s important to consult with a knowledgeable attorney to evaluate your home’s status and overall financial picture.


Legal Guidance for New Jersey Residents


At Carroll Law Firm, P.C., we help New Jersey residents make informed decisions about bankruptcy while protecting the assets that matter most. If you're worried about your home and considering bankruptcy, we're here to help you understand your options and take the next step with confidence.

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