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Your Home in Chapter 7 — When You Can Keep It and When You Cannot \| iFightDebt.com

iFightDebt · Maryland Consumer Defense

Your Home in Chapter 7 — When You Can Keep It and When You Cannot

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A Maryland homeowner's plain-English guide to Chapter 7 and your house — what a trustee can and cannot sell, and the mistakes that put a home at risk.

By Amir Guerami, The Guerami Law Firm, LLC  ·  Posted July 27, 2026

Will Bankruptcy Take My House?

It is the first question almost every Maryland homeowner asks before filing bankruptcy, and it is asked in fear: if I file, do I lose my house? You have poured years into that home. The idea of a court handing it to your creditors is enough to keep some people from getting help at all.

Here is the honest worst case: in a Chapter 7, a court-appointed trustee can sell property you cannot protect — and if your home holds significant equity above what the law shields, the trustee can sell it, pay off your mortgage, hand you your protected share, and give the rest to your creditors.

But that worst case is far from the common one. Most Maryland homeowners who file Chapter 7 keep their homes. Whether you are one of them comes down to a handful of specific facts — and knowing them before you file is everything.

It Is Not About the House — It Is About the Equity

A Chapter 7 trustee is not interested in your house. The trustee is interested in equity — the dollars left over if the home were sold and the mortgage paid off. If there is little or no equity above what you still owe, there is nothing for the trustee to take, and the home is not at risk from the bankruptcy itself.

Equity is simple math: what your home would sell for, minus what you owe on the mortgage, minus the cost of selling. A house worth $350,000 with a $330,000 mortgage has very little equity to fight over. The same house with a $150,000 mortgage has a great deal.

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Maryland's Homestead Exemption Maryland law lets you protect a set amount of equity in your primary residence — a figure tied to a federal number that adjusts every few years. Married couples who both file on a jointly owned home may be able to double it. Because the amount changes, confirm the current figure with a Maryland attorney before you rely on it.

The Maryland Shield — Tenancy by the Entirety

Maryland gives married homeowners a second, powerful layer of protection. If you and your spouse own your home as tenants by the entirety — a form of joint ownership reserved for married couples — the home is generally beyond the reach of debts that belong to just one of you.

So if only one spouse files Chapter 7, and the debts are that spouse's alone, the equity held as tenants by the entirety is usually protected. The catch: debts you both owe together can still reach the home. This is one of the most misunderstood — and most valuable — protections in Maryland consumer bankruptcy.

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Do NOT stop paying your mortgage because you plan to file. Filing pauses a foreclosure for a time, but Chapter 7 does not erase what you owe on the house and does not catch up missed payments. And do NOT transfer your home to a relative to “protect” it before filing — a trustee can undo that transfer as a fraud on your creditors, and it can sink your entire case.

“In Maryland, whether you keep your home in Chapter 7 rarely turns on the house itself — it turns on your equity and how you hold the title.”

Keeping the Home Means Keeping the Mortgage

A Chapter 7 wipes out what you personally owe on many debts. It does not remove the lien your mortgage lender holds on your house. If you want to keep the home, you keep paying the mortgage — during the case and after it ends.

This is why being behind on the mortgage changes everything. Chapter 7 does not cure a default. If you have fallen behind and want to save the house, Chapter 13 — the court-supervised repayment plan — is often the better tool, because it lets you spread the missed payments over time while you stay in the home. Choosing the wrong chapter can cost you the very house you were trying to save.

Three Things To Do Before You File

1\. Figure out your real equity

Get a realistic sense of what your home would sell for today, subtract the full mortgage balance, and subtract the cost of a sale. That number — not the emotional value of the home — is what determines whether the house is at risk.

2\. Know how you hold title

Pull your deed and find out exactly how you own the home. If you are married and hold it as tenants by the entirety, that may change everything about your options. If you own it alone, or with someone other than a spouse, different rules apply.

3\. Talk to a Maryland bankruptcy attorney before you file anything

The choice between Chapter 7 and Chapter 13, the timing of your filing, and which exemptions apply all turn on your specific facts. A Maryland consumer attorney can tell you — before you file — whether your home is safe and which chapter actually protects it.

The Bottom Line

For most Maryland homeowners, Chapter 7 is not the end of the house — it is a fresh start that leaves the home intact. Whether you keep it comes down to your equity, how you hold title, and whether you are current on the mortgage. Those are knowable facts. Learn them, get honest advice, and do not let fear of losing your home keep you from the relief you may badly need.

This article is for general educational purposes only. It is not legal advice and does not create an attorney-client relationship. Maryland law changes, and every case turns on its own facts. If you or someone you love needs honest guidance on bankruptcy, debt settlement, creditor harassment, and collection defense, speak with a Maryland consumer attorney about your specific situation before making any decisions.

Contact The Guerami Law Firm, LLC through www.ifightdebt.com for a confidential consultation with Amir Guerami and his team.