Losing a home is usually the first fear people have when they hear the words “Chapter 7 bankruptcy.” If you live in the Kansas City area and your house is your largest asset, the idea of a “liquidation” case can feel like a direct threat to your family’s stability. You might be lying awake doing mental math on your mortgage, wondering if a court could force you out of the place you worked so hard to buy.
For many Kansas City homeowners, that fear is not the full story. Chapter 7 has a powerful tool called the home exemption that can protect equity in your primary residence, and in a lot of cases, people keep their homes and still wipe out credit cards, medical bills, and other unsecured debts. The key question is not “Does Chapter 7 always take my house?” but “How much equity do I have, and how do Missouri or Kansas exemption rules apply to my situation?”
At Patton & Dean, LLC, we walk Kansas City families through that exact calculation every day. We look at the same numbers a Chapter 7 trustee will look at, such as current home value, mortgage balance, and any liens, and we apply the Chapter 7 home exemption available under Missouri or Kansas law. Our goal is to replace guesswork and internet rumors with a clear, local answer about what filing would really mean for your home.
Why Chapter 7 Does Not Automatically Mean Losing Your Home
Chapter 7 is often called a “liquidation” bankruptcy, but that word causes a lot of confusion. In real life, most people who file Chapter 7 do not lose everything they own. The law allows you to claim exemptions, which are protections that take certain property out of reach of creditors and the Chapter 7 trustee. Your clothes, basic household goods, retirement accounts, and, for many people, equity in a primary home all fall under different exemption rules.
The Chapter 7 home exemption is the rule set that protects some or all of your equity in your residence. Equity is simply the value of your home minus what you owe on mortgages and other liens. If all of your equity fits inside the applicable homestead exemption, a Chapter 7 trustee usually has no reason to sell the property, because there would be nothing left over to pay creditors after honoring the exemption and liens. When that happens, your home is functionally off the table in the bankruptcy case.
Two opposite myths often drive bad decisions. One is “If I file Chapter 7, I will automatically lose my house.” The other is “As long as I keep paying my mortgage, the court cannot touch my house.” Neither is accurate. The mortgage lender and the trustee have different roles. The lender cares whether you pay under the loan. The trustee looks at whether there is nonexempt equity that could be sold for the benefit of your unsecured creditors. Understanding that distinction is the first step in using the Chapter 7 home exemption to your advantage.
When we meet with Kansas City homeowners, we do not assume Chapter 7 is safe or unsafe for the house. We start by mapping out all assets and debts, then we apply the right exemption scheme and walk through how a trustee is likely to view the home. That individualized review, grounded in your numbers instead of general assumptions, matters far more than generic internet advice.
How the Chapter 7 Home Exemption Protects Your Equity
To see how the Chapter 7 home exemption works, you first need a realistic picture of your equity. Start with the likely market value of your home. Many people use a recent appraisal, a comparative market analysis from a real estate agent, or a combination of tax assessment and recent neighborhood sales. From that number, subtract your current mortgage balances and any other recorded liens against the property, such as a home equity line of credit.
Imagine a house in the Kansas City area with a market value of $250,000 and a mortgage balance of $240,000. Ignoring other liens for the moment, this homeowner has about $10,000 in equity. Now compare that to a second homeowner with a $250,000 house and a mortgage balance of $100,000. That person has about $150,000 in equity. Both are in the same city, but their risk profiles in Chapter 7 are very different because exemption rules do not change the underlying math.
The Chapter 7 home exemption protects a certain amount of equity in your primary residence, often referred to as the homestead exemption. The exact protection available depends on whether you are under Missouri or Kansas rules, and in some cases, whether you can use a federal exemption scheme. If your equity, such as the $10,000 in the first example, falls well below the homestead protection, there is typically no benefit to the bankruptcy estate in selling your home. If your equity, such as $150,000 in the second example, exceeds the available protection by a wide margin, a trustee may see potential value in a sale.
Even in situations where equity is close to the exemption limit, the trustee’s practical analysis still matters. Selling a house involves closing costs, real estate commissions, time, and risk. When we review a case, we walk through not only the raw equity calculation but also how costs and realistic sale prices affect what, if anything, would be left for creditors. We rely on actual documents, such as mortgage statements and property records, not guesses, because the Chapter 7 home exemption only works in your favor if the math is accurate and applied correctly.
Missouri vs. Kansas: Why State Law Matters for Your Home Exemption
Kansas City is unique because it straddles two states. Whether you live in Kansas City, Missouri, or Kansas City, Kansas, and how long you have lived there, can change which homestead exemption rules apply to your Chapter 7 case. Bankruptcy is federal, but the exemptions you use are often based on state law and residency history, which can be confusing if you have moved across the state line or recently relocated within the region.
Missouri and Kansas each have their own homestead frameworks that protect equity in a primary residence. They differ in how they set limits and in how those rules interact with other available exemptions. In some situations, federal exemption schemes may be an option, and those come with their own tradeoffs. The basic idea, however, is the same in both states: lawmakers have decided that people should be able to keep at least some equity in their home when they file Chapter 7, so they can get a fresh start without automatically losing their residence.
Residency rules add another layer. Bankruptcy law looks back to see where you have lived for a certain period before filing to decide which state’s exemption laws you can use. For example, if you recently moved from Kansas City, Kansas, to Kansas City, Missouri, you may not automatically be able to claim Missouri homestead protections. The details are technical, but the effect is very practical: choosing a filing date without understanding these lookback rules can cost or save a significant amount of protected equity.
Because we work with clients on both sides of the state line, we see how these rules play out in real Kansas City neighborhoods. Part of our job is to match your residency history and your home’s location to the right exemption scheme, then compare the protection it offers to your actual equity. That local, numbers-based comparison often reveals options that are not obvious from reading general articles about Chapter 7 home exemptions.
When a Chapter 7 Trustee Might Try to Sell a Home
Even with a homestead exemption in place, there are situations where a Chapter 7 trustee may look closely at a home. The trustee’s job is to find nonexempt assets that can be sold to pay unsecured creditors. Nonexempt equity in a house, which is equity above all liens and exemptions, can be one of those assets if there is enough value left after costs to make a sale worthwhile.
Trustees look at a simple version of the same math we do with clients. They start with an estimated sale price for the home. From that, they subtract mortgages and other liens, the applicable homestead exemption, and realistic selling costs such as realtor commissions and closing expenses. Whatever remains is potential “net to the estate.” If the projected net number is small or negative, there is little reason to pursue a sale. If the number is significant, the trustee has more incentive to act, and the risk to your home in Chapter 7 increases.
For example, imagine a home that could sell for $300,000 with a mortgage of $200,000, a homestead exemption covering $75,000 of equity, and estimated selling costs of $20,000. The rough calculation is $300,000 minus $200,000 minus $75,000 minus $20,000, leaving about $5,000 for the estate. Many trustees would view that as too thin to justify the time and risk of a sale. Change the numbers to a $300,000 home with only a $100,000 mortgage, the same exemption, and similar costs, and you end up with a much larger potential net. That is the sort of case that may attract attention from a trustee.
Borderline situations are where local experience matters. Different trustees in the Kansas City area may have different appetites for chasing modest net recoveries, and real estate market conditions can shift quickly. We regularly walk homeowners through several “what if” scenarios before filing, such as what happens if the trustee’s value estimate is higher than expected, or if selling costs run lower than we project. That way, clients choose a path into Chapter 7 with a clear view of the actual risks to their home instead of relying on best guesses.
How Your Mortgage Status Affects Keeping Your Home in Chapter 7
The Chapter 7 home exemption addresses equity, but your mortgage status adds a separate layer. If you are current on your mortgage at the time you file and your equity is within the exemption, many lenders simply accept continued payments, and you keep living in the home. The bankruptcy wipes out qualifying unsecured debts, which can actually make it easier to stay current on the mortgage going forward because your monthly obligations are lower.
If you are behind on the mortgage, Chapter 7 offers only limited help. Filing triggers the automatic stay, which is a legal pause on most collection actions, including foreclosure, while your case is pending. That pause can buy a little breathing room, but Chapter 7 does not provide a long-term plan to catch up on missed payments. Once the case is over or the stay is lifted, the lender can typically resume foreclosure unless you have worked out a separate arrangement with them.
There are also strategic questions around reaffirmation agreements. A reaffirmation is an agreement you sign during the Chapter 7 case that keeps you personally liable for a specific debt, such as a mortgage. Some lenders prefer reaffirmations, while in other cases it may be safer for you to continue paying without reaffirming, depending on the local court’s practices and the lender’s policies. Reaffirming a debt you cannot realistically afford can undo some of the relief you hoped to gain from bankruptcy and put you back under pressure.
In our practice, we do not recommend reaffirmation automatically. We look at your full budget after other debts are wiped out, your goals for the home, and how your lender usually handles non-reaffirmed mortgages. For some Kansas City homeowners, staying in the property and paying without reaffirmation is a workable path. For others, especially those who are multiple payments behind, we may talk frankly about whether Chapter 13 or a negotiated solution with the lender is a better way to keep the home.
When Chapter 13 Protects Your Home Better Than Chapter 7
Sometimes, the Chapter 7 home exemption and your mortgage status do not line up in a way that safely protects your house. In those situations, Chapter 13, which reorganizes debts through a three to five-year payment plan, can be a safer tool for Kansas City homeowners who are focused on keeping their residence and need time to fix arrears or protect higher equity.
Chapter 13 allows you to catch up on missed mortgage payments over time while you continue to make your regular monthly payment. As long as you stay on track with the plan and keep current going forward, many mortgage lenders are barred from foreclosing based on past due amounts. The same plan can also be structured to account for nonexempt equity that would be at risk in Chapter 7, by requiring you to pay at least that amount to unsecured creditors over the life of the plan instead of giving up the home in a Chapter 7 case.
Consider again a homeowner with a $300,000 property, a $100,000 mortgage, and a homestead exemption that protects only part of the $200,000 equity. In Chapter 7, a trustee might see this as an opportunity to sell the house because there could be a large net gain to the estate. In Chapter 13, that same homeowner may propose a plan that pays creditors an amount tied to that nonexempt equity while keeping the property, assuming income is sufficient to support both the mortgage and the plan payment. The tradeoff is time and discipline versus the risk of an involuntary sale in Chapter 7.
We routinely model both Chapter 7 and Chapter 13 outcomes for clients whose homes sit in this gray area. The right answer depends on your income, your other debts, and how strongly you want to keep this particular property. Our focus is not to push Chapter 7 or Chapter 13 as a default choice, but to show how each would treat your home and then help you choose the path that best supports your long-term stability.
Practical Steps to Check Whether Your Home May Be Safe in Chapter 7
Even before you sit down with an attorney, there are practical steps you can take to get a clearer picture of where you stand. Start by gathering a recent mortgage statement for every loan secured by your home, including any home equity lines of credit. Pull your latest property tax assessment and, if possible, any recent appraisal or comparative market analysis that reflects current values in your Kansas City neighborhood.
Next, do a rough equity calculation. Take your best estimate of the home’s market value and subtract all mortgage balances and known liens. The result is your approximate equity. While we cannot give legal advice through a generic article, you can compare that rough equity number to typical homestead protection ranges you have seen discussed for Missouri or Kansas to get a sense of whether you might be well under, close to, or far above the likely protection level. Remember that this is only a starting point, not a definitive answer about what a Chapter 7 trustee will do.
Do not overlook judgment liens or tax liens. These can attach to your home and change the equity picture significantly. In some cases, bankruptcy provides tools to remove or “avoid” certain judgment liens if they impair an exemption, which can free up additional protected equity. Sorting out which liens are avoidable and how that interacts with the Chapter 7 home exemption is a detailed legal question that should be handled in a consultation, not by guesswork or online calculators.
One thing we often tell clients is to avoid making large, last-minute changes related to the home without advice. Big extra mortgage payments, title transfers to family members, or quick refinances can all have unintended consequences in Chapter 7. When you meet with us, we use the documents you gathered to run the same kinds of numbers and scenarios we have discussed in this article, so you walk away with a concrete sense of whether Chapter 7 appears safe for your home or whether another strategy would protect you better.
How Patton & Dean, LLC Helps Kansas City Homeowners Protect Their Homes
Deciding whether to file Chapter 7 and whether that choice puts your home at risk is not something you should do alone or based only on online calculators. At Patton & Dean, LLC, you work one-on-one with a single attorney who learns the details of your home, your mortgage, your income, and your goals. That ongoing relationship matters when you are making decisions that affect where your family will live for years to come.
We do more than file paperwork. We compare Chapter 7 and Chapter 13 scenarios side by side, apply Missouri or Kansas homestead rules correctly based on your residency history, and walk you through how trustees in the Kansas City area typically view homes like yours. If Chapter 7 appears to put your house at unnecessary risk, we will say so and explore alternatives such as Chapter 13 or negotiated solutions with your lender so you can choose an option that matches your priorities.
Our support does not end with the court’s decision. We also offer credit protection, repair, and rebuilding services after bankruptcy at no additional cost. For homeowners, that long-term focus can make the difference between simply keeping a house and being able to refinance, stay current, and feel truly stable in the years after a filing. We want your home to be part of a durable financial recovery, not a temporary victory that leads to new stress.
If you are a Kansas City homeowner worried about how the Chapter 7 home exemption applies to your situation, a conversation with us can replace fear with a clear plan. Bring your mortgage statements, any value estimates, and your questions, and we will walk through your numbers together so you can decide whether Chapter 7, Chapter 13, or another path makes the most sense for your home.
Call (913) 203-4786 to schedule a consultation with Patton & Dean, LLC.
