The fate of your home depends on several factors, including the type of bankruptcy you file, the amount of equity in your home, and your ability to stay current on mortgage payments.

Chapter 7 Bankruptcy and Your Home

Chapter 7 is a liquidation bankruptcy, meaning non-exempt assets may be sold to pay creditors. However, Connecticut’s homestead exemption may allow you to keep your home if:

• Your equity does not exceed the exemption limit ($250,000 as of 2021 for an individual homeowner).
• You are current on your mortgage.
• You can continue to make payments going forward.

If your equity exceeds the exemption or if you’re behind on payments, the bankruptcy trustee may sell the home to repay creditors. Filing Chapter 7 also puts an automatic stay in place, temporarily stopping foreclosure proceedings.



Chapter 13 Bankruptcy and Your Home

Chapter 13 involves creating a 3- to 5-year repayment plan. This can help you catch up on past-due mortgage payments and keep your home—even if you're facing foreclosure. It’s particularly helpful for homeowners with steady income who want to protect their property while resolving debt.

Benefits of Chapter 13 include:

• Halting foreclosure through the automatic stay.
• Catching up on missed mortgage payments over time.
• Possibly eliminating junior mortgages or liens in some situations.

Understanding Connecticut’s Homestead Exemption

Connecticut allows homeowners to exempt up to $250,000 of equity in their primary residence from creditors in bankruptcy. This exemption can make a major difference in whether you can keep your home. Married couples who co-own a home may be able to double the exemption.

What You Should Do First

Before filing for bankruptcy, it’s critical to assess your home equity, your mortgage status, and your income. You should also avoid transferring your home or making large financial moves without legal advice, as these could trigger challenges from the bankruptcy court or trustee.

Talk to a Connecticut Bankruptcy Attorney

At Grafstein & Arcaro, LLC, we provide legal assistance to people across Connecticut considering bankruptcy. Whether you're struggling with foreclosure, unmanageable debt, or both, our team can evaluate your situation and explain your options clearly and honestly. Filing for bankruptcy does not automatically mean losing your home—but you need a plan to protect it.