Updated July 2026 — current 2026 inflation-adjusted California homestead exemption figures, Chapter 7 vs Chapter 13 in real estate contexts

If you’re facing bankruptcy and own a home in Fresno County, a lot of anxious questions hit at once: can they take my house? What happens to my mortgage? Should I file Chapter 7 or Chapter 13? Can I sell my house before filing? After filing? Will my credit recover if I sell instead of file?

This guide walks through the main bankruptcy paths, how California’s generous homestead exemption protects your home equity, when selling beats filing, and how HTV Properties buys homes from Fresno homeowners both before and during bankruptcy.

California’s Homestead Exemption — Your First Shield

California’s homestead exemption protects a significant portion of your home equity from creditors in bankruptcy. Under current law (AB 1885, adjusted annually for inflation), the 2026 figures are:

Minimum exemption (2026): $371,841 per homestead
Maximum exemption (2026): $743,681 in the state’s highest-cost counties
Your exemption equals your county’s prior-year median single-family sale price (within that floor and cap) — with the Fresno County median running around $430,000, most Fresno homeowners get roughly a $430,000 homestead exemption in 2026

What this means: if you have $200,000 of equity in your Fresno home and your homestead exemption is roughly $430,000, a bankruptcy trustee CANNOT force the sale of your home to pay creditors — your equity is fully protected.

Above the exemption, the trustee could potentially force a sale (Chapter 7) or require you to pay creditors the non-exempt portion through a repayment plan (Chapter 13).

Chapter 7 vs. Chapter 13 — The Real Estate Difference

Chapter 7 (Liquidation Bankruptcy)

What happens to your house:

If your equity is within the homestead exemption, you keep the house. Trustee can’t touch it.
If your equity exceeds the exemption, trustee MAY sell the home to pay creditors (and give you the exempt portion).
Your mortgage payments must stay current during the process. Falling behind on mortgage during Chapter 7 can trigger foreclosure separate from the bankruptcy.
Chapter 7 typically wraps up in 4–6 months.

Fits when: You have unsecured debt you can’t pay (credit cards, medical bills, personal loans), your home equity is within exemption limits, and you want a fast fresh start.

Chapter 13 (Reorganization Bankruptcy)

What happens to your house:

Automatic stay stops foreclosure immediately — the moment you file, any pending foreclosure is halted.
You propose a 3–5 year repayment plan to catch up missed mortgage payments while staying current on ongoing payments.
Non-exempt equity may require additional payment to creditors over the plan period.
If you complete the plan, you keep the home and emerge with remaining debts discharged.

Fits when: You’re behind on mortgage but have steady income, you want to keep the home, and you can commit to 3–5 years of structured repayments.

Watch out: Chapter 13 plan success rate is only around 40% nationally. Many filers can’t sustain 3–5 years of payments + catch-up payments + remaining expenses. If the plan fails, you end up back in foreclosure or converted to Chapter 7.

Selling BEFORE Filing Bankruptcy — Often Overlooked

Many homeowners don’t realize this path exists: sell your Fresno home before filing bankruptcy to convert your equity into protected cash.

How it works:

Sell the home (traditional listing or cash sale)
Use proceeds to pay off the mortgage + any liens
Remaining equity (the cash you net) can often be protected under California’s wildcard exemption or homestead rules
File bankruptcy to discharge unsecured debts
Restart with cash + clean credit slate

Advantages:

Full control over sale (no trustee intervention, no forced-sale timeline)
Potentially get a better price than a trustee auction
Avoid foreclosure mark on credit (7 years) if you’re behind on mortgage
Walk into bankruptcy filing with no mortgage debt weighing on the petition

CRITICAL: You MUST talk to a California bankruptcy attorney BEFORE selling. The trustee can “look back” at your transactions — 90 days for payments to ordinary creditors, a full year for payments or transfers to insiders like family members, and up to 2 years under federal law (4 years under California law) for any transfer that looks designed to hide assets from creditors. Those sales can be unwound. An arms-length sale to a legitimate cash buyer at fair market price is generally safe; creative structures intended to park equity with relatives are not.

Selling DURING Bankruptcy — Requires Trustee Approval

If you’ve already filed, you can still sell — but the trustee must approve the sale. The process:

File a motion with the bankruptcy court requesting permission to sell
Your attorney submits the purchase agreement + proof that the sale is at fair market value
Trustee reviews and (usually) approves within 30 days if the sale is at or above appraised value
Proceeds go to paying secured debt (mortgage), exempted equity to you, non-exempt equity to creditors through the trustee

HTV Properties has done several purchases from Fresno homeowners mid-bankruptcy. We work with your bankruptcy attorney, provide the documentation the court needs, and close within the trustee’s approval timeline.

Credit Impact — Bankruptcy vs. Cash Sale

Event	Credit Score Hit	Credit Report Duration
Chapter 7 bankruptcy	130–240 points	10 years
Chapter 13 bankruptcy	130–200 points	7 years
Foreclosure	100–160 points	7 years
Cash sale (before foreclosure/bankruptcy)	Minor (just from missed payments already recorded)	Missed payments: 7 years

Selling before triggering foreclosure or bankruptcy does the least credit damage — but only works if you have equity and time.

Frequently Asked Questions

Can a bankruptcy trustee take my Fresno home?

Only if your equity exceeds California’s homestead exemption — roughly $430,000 for Fresno County in 2026 (statewide range: $371,841 floor to $743,681 cap, set by county median home price). Most Fresno homeowners’ equity is fully protected.

Can I sell my home right before filing bankruptcy?

Yes, but talk to a bankruptcy attorney first. A legitimate arms-length sale at fair market value is generally safe. Sales that look designed to hide assets can be clawed back by the trustee.

If I file Chapter 13, what happens to my mortgage?

Your ongoing mortgage payment stays current (you still pay it monthly). Missed back-payments get rolled into your 3-5 year Chapter 13 plan. If you complete the plan, you keep the home.

I already filed. Can HTV still buy my house?

Yes, but the purchase needs trustee/court approval. Your bankruptcy attorney files the motion, we provide documentation, court approves within ~30 days, we close.

Do I need an attorney for bankruptcy?

Yes — bankruptcy is complex and mistakes are costly. Most Fresno bankruptcy attorneys offer free initial consultations. HTV works with several excellent local ones and can refer you.

Talk to Us Before You Decide

If you’re weighing bankruptcy against selling, call HTV Properties at (559) 854-1663 for a free 10-minute consultation. We’ll help you see what a cash sale would look like financially, refer you to a bankruptcy attorney if that’s the right path, and be honest when listing is your better option. No pressure, no fees.

Related resources

Disclaimer: HTV Properties LLC is a Fresno cash home buyer with a California-licensed real estate agent on our team. We are not bankruptcy attorneys. This guide is for educational purposes only. Bankruptcy law is complex; consult a California bankruptcy attorney before making decisions about your specific situation.

Can You Sell a House in Bankruptcy? Chapter 7 vs Chapter 13 Fresno Guide