The number one question that we receive when a client inquires about filing bankruptcy is whether they can keep their home. Unfortunately, in this real estate market, the answer is not so simple anymore. Prior to the uptick in home values, the majority of homes were underwater. Due to this, you could keep your home as long as you continued to stay current on their mortgages. However, even then, if you file a Chapter 7, the bankruptcy trustee can still choose to “short sale” your home and negotiate a carve-out for your unsecured creditors. This didn’t use to be the norm, but it’s how things are playing out in the Western District of Washington. Not all trustees will want to short sell a home, but it is an option. There are definitely arguments to allow you to keep your home when it is underwater and we will lay those out for you, if you are in this situation. However, nowadays, the real issue is having TOO much equity in your home. Under the WA state exemptions, you can have no more than $125,000 in equity to keep your home – it’s even lower under the federal exemptions. However, even if you are under that amount, it is risky to file a Chapter 7 bankruptcy. Why? Well, because bankruptcy trustees can keep your case open and wait for your home to appreciate even more and then sell it. We are extremely cautious with filing any clients into a Chapter 7 that own a home and frequently recommend a Chapter 13 to keep you in control of your most prized asset, your home. At your consult, we will lay out all your options prior to filing and make sure that you are informed on every possible outcome that your case can take. Contact Encompass Law Group, PLLC for your free initial consultation.