When a bankruptcy is filed all non-exempt assets are included in the bankruptcy. Your home’s equity must also be included.
Where a bankrupt has more than $10,000 in equity in the home, the amount of equity will be considered an asset.
Where there is equity the bankrupt can either surrender the home to the trustees or pay the amount of the equity into the bankruptcy and keep the home.
For example, where the Trustee has determined that after deducting costs and mortgages that the equity in a bankrupt’s home is valued at $20,000, the bankrupt can either pay $20,000 into the bankruptcy or surrender the home to the trustee.
Where there is no equity in the home, the home will not be considered an asset when you file for bankruptcy.