Filing for bankruptcy is often a difficult decision, especially if you’re worried about losing your home. At Alta Legal, we help Utah residents understand how bankruptcy affects homeownership and what options may be available to protect their property.

Understanding the Types of Bankruptcy

The impact bankruptcy has on your home depends on the type of bankruptcy you file:

• Chapter 7 Bankruptcy: Often called “liquidation” bankruptcy, this process involves selling non-exempt assets to pay off creditors. However, many homeowners can keep their homes by using exemptions.
• Chapter 13 Bankruptcy: Known as a “wage earner’s plan,” this type of bankruptcy allows you to catch up on mortgage payments over a 3-5 year repayment plan while keeping your home.

Utah’s Homestead Exemption

Utah offers a homestead exemption that protects a portion of your home’s equity during bankruptcy. As of 2025, the exemption is:

• $42,000 for an individual
• $84,000 for a couple

This means that if your equity falls below these limits, you may be able to keep your home even in Chapter 7 bankruptcy.

What If You’re Behind on Mortgage Payments?

If you’ve fallen behind on payments:

• Chapter 13 may help you avoid foreclosure by allowing you to catch up through a structured repayment plan.
• Chapter 7 may not stop a foreclosure if you can’t get current on your mortgage.

Do You Want to Surrender the Home?

Bankruptcy also gives you the option to surrender your home if the mortgage is unaffordable. This can eliminate your obligation to pay the remaining balance if the home is worth less than what you owe.

Every Case Is Unique

Whether you can keep your home depends on several factors: your income, equity, payment status, and the type of bankruptcy filed. A consultation with a knowledgeable attorney can help you determine the best course of action.

At Alta Legal, we provide legal assistance to the Utah public, helping individuals make informed decisions about bankruptcy and homeownership.