As a Bankruptcy Attorney with over 35 years of experience helping people in debt, one of the most common questions I hear is:
“If I file bankruptcy, will I lose my house?”
Fortunately, for many Illinois homeowners, the answer is no.
In fact, bankruptcy is often the tool we use to help people save their homes, stop foreclosure, eliminate debt, and get a fresh financial start.
How Chapter 13 Can Help You Save Your Home
If you have fallen behind on your mortgage payments, a Chapter 13 bankruptcy Plan allows you to catch up over time.
When a Chapter 13 case is filed, the Automatic Stay stops foreclosure proceedings immediately. You can then propose a repayment plan lasting three to five years that allows you to repay your mortgage arrears while continuing to make your regular mortgage payments.
For example, if you are $20,000 behind on your mortgage, a Chapter 13 Plan allows you to spread that amount over a repayment plan over time instead of paying it all at once.
For many homeowners facing foreclosure, Chapter 13 provides the opportunity they need to catch up and keep their homes. I have helped hundreds of Illinois homeowners save their homes over the years.
How Chapter 7 Can Protect Your Home
If you are current on your mortgage but overwhelmed by credit cards, medical bills, personal loans, or collection accounts, Chapter 7 bankruptcy may be the better option.
Chapter 7 can eliminate many unsecured debts, making it easier to afford your mortgage payments moving forward.
People are surprised to learn that filing Chapter 7 does not automatically mean losing their home.
Illinois’ New $50,000 Homestead Exemption
As of January 1, 2026, Illinois homeowners can protect up to $50,000 of equity in their primary residence. Married couples filing jointly can protect up to $100,000 of equity.
Equity is calculated by subtracting the mortgage balance from the home’s value.
For example:
- Home value: $350,000
- Mortgage balance: $275,000
- Equity: $75,000
A married couple filing jointly could protect all $75,000 of equity because the Illinois homestead exemption now protects up to $100,000.
This significant increase in the homestead exemption means that many more Illinois homeowners can now qualify for Chapter 7 bankruptcy while protecting the equity they have worked hard to build.
Every Case Is Different
The amount of equity in your home, your mortgage balance, your income, and your overall financial situation all affect whether Chapter 7 or Chapter 13 is the better choice.
The good news is that we help our clients use bankruptcy to protect their home, not lose it.
If you are facing foreclosure, struggling with debt, or simply wondering whether your home is protected, speaking with an experienced Illinois bankruptcy attorney can help you understand your options before your situation becomes more difficult.
At Bankruptcy Law Chicago, LLC, we help homeowners throughout Illinois use Chapter 7 and Chapter 13 bankruptcy to protect their homes, eliminate debt, and achieve a fresh financial start.
Call or email us now for a free video or in-person consultation with our experienced attorneys. We will give you “Peace of Mind”.
Daniel J. Winter
BankrutpcyLawChicago.com
312-427-1613
