One of the most common questions we hear from people considering bankruptcy is:
“I own a home that is in my name, but I don’t live there. Someone else lives there and pays the mortgage. Can I still file bankruptcy? And can I keep the house out of it?”
If you’ve been searching online, you’ve probably seen a lot of confusing answers — and unfortunately, many people don’t get clear guidance until it’s too late.
Let’s break this down in plain English.
First Things First: Yes, You Can Still File Bankruptcy
Owning a home you do not live in does not automatically prevent you from filing bankruptcy.
People file bankruptcy every day while owning:
- rental properties
- inherited homes
- family homes
- homes they moved out of after divorce or separation
- homes they are “helping” someone else keep
So the short answer is:
Yes — you can file bankruptcy even if you own a home you don’t live in.
But the more important question is:
Can you keep it out of the bankruptcy?
Can You “Keep It Out” of the Bankruptcy?
Here’s the truth:
No, you cannot hide or exclude property you own from bankruptcy.
If your name is on the deed, then legally:
- it is your asset
- it must be disclosed in bankruptcy
- it becomes part of the bankruptcy estate
Even if:
- you don’t live there
- you don’t pay the mortgage
- someone else is responsible for the bills
- you “only put your name on it to help”
Bankruptcy requires full transparency. All real estate must be listed.
Trying to leave it out can lead to serious consequences, including denial of discharge or even allegations of fraud.
But Can You Still Keep the Property?
Yes — in many cases you can still keep it.
The real issue is not whether you live there.
The issue is whether you have equity in the property and whether that equity is protected under exemption laws.
What Bankruptcy Cares About: Equity
Equity is the difference between:
the market value of the home
minus
the mortgage balance and liens
For example:
- Home value: $250,000
- Mortgage owed: $240,000
- Equity: $10,000
Bankruptcy doesn’t focus on who pays the mortgage. It focuses on what the home is worth and what portion of it is yours.
What Happens in Chapter 7 Bankruptcy?
In a Chapter 7 bankruptcy, a Trustee is appointed to look for assets that could be sold to pay creditors.
If the house has significant unprotected equity, the Trustee may consider selling it — even if you don’t live there.
That surprises a lot of people.
In Chapter 7, the Trustee may ask:
- What is the home worth?
- How much is owed?
- Who is living there?
- Who is paying the mortgage?
- Is there rental income?
- Is there equity that creditors could benefit from?
If there is little or no equity, or the equity is exempt, the Trustee often has no reason to take it.
What Happens in Chapter 13 Bankruptcy?
In a Chapter 13 bankruptcy, you usually keep your property, but you must repay creditors over time through a repayment plan.
Chapter 13 can be a good option when:
- there is equity in the home
- you want to protect the property
- selling it is not an option
- you need time and flexibility
In many cases, Chapter 13 is the safer route for someone trying to protect a non-residential property.
What If Someone Else Pays the Mortgage?
This is very common. For example:
- a parent lives there
- an adult child lives there
- an ex-spouse lives there
- a relative lives there and “covers the payments”
However, bankruptcy courts may view this situation differently depending on the facts.
Some important questions include:
1. Is the person paying the mortgage a tenant?
If they live there and pay the mortgage, the Trustee may treat it like rental income.
2. Are they paying you directly or paying the lender directly?
This matters because it may show whether you are receiving income.
3. Is there a written lease agreement?
A lease can help show that this is a legitimate rental arrangement.
4. Are you responsible if they stop paying?
Even if someone else pays, if the mortgage is in your name, you are still legally responsible.
Why This Can Get Complicated Quickly
If someone else is paying your mortgage, it may feel like the home is “their house,” but legally it is not.
If your name is on the deed, bankruptcy law treats it as yours.
This becomes especially important if:
- the home has equity
- the home was transferred recently
- the property was inherited
- the mortgage payments are being treated as “gifts”
- the home is being held for someone else informally
These details can impact whether the Trustee believes the property is protected.
Can You Transfer the House Before Bankruptcy?
Many people ask:
“What if I just transfer the house to the person living there before I file?”
Be careful.
Transferring real estate right before bankruptcy can create major legal issues, including:
- fraudulent transfer claims
- Trustee lawsuits
- reversal of the transfer
- denial of discharge
Even if your intentions are innocent, bankruptcy courts look closely at transfers made in the years leading up to filing.
Never transfer property without legal advice first.
The Bottom Line
If you own a house you do not live in, and someone else pays the mortgage:
✅ You can still file bankruptcy
❌ You cannot keep it “out” of the bankruptcy paperwork
✅ You may still be able to keep the property, depending on:
- equity
- exemptions
- the bankruptcy chapter filed
- the overall financial picture
The key is that this is not a DIY situation.
If You’re in This Situation, Talk to an Attorney Before Filing
This is one of those issues where the wrong filing choice could cause serious consequences.
If you’re considering bankruptcy and want to protect property you own — especially a home you don’t live in — the best thing you can do is get legal advice before filing.
A proper strategy can make the difference between keeping the home or putting it at risk.
Need Help? We Can Review Your Situation.
If you’re considering bankruptcy and unsure how property ownership affects your case, we can help you understand your options and what risks you may be facing.
Bankruptcy can offer relief — but only if it’s done correctly.
