One of the common beliefs about bankruptcy is that it will leave you with nothing, living out of a cardboard box. That’s so not true even in Chapter 7 cases. In theory, Chapter 7 involves liquidating most of a debtor’s assets to pay creditors, including the home. Not so fast..in reality, homeowners who end up filing often don’t have enough equity in their home to benefit creditors, either because they’ve taken out an additional mortgage, the home’s value has fallen or maybe both. In such cases, the trustee handling the bankruptcy can decide not to sell the home and in this case the debtor gets to keep it. There’s something called the homestead exemption which allows you to keep your primary residence depending on the current state you live in.