Facing a financial crisis can be a scary situation. Many people find themselves in situations where there is no clean-cut answer to their financial problems. Dealing with multiple creditors with different policies can seem like a never ending book of fine-print.

When people think about their financial problems, one of the first things they think of is their home. After all, a person's home is what they've worked so hard for and developed so many memories in. Financial hardship can lead a person to think about filing for Chapter 7 bankruptcy protection, causing them to worry about what might happen to their home. Will a bankruptcy mean losing their home?

There are many different variables that a court appointed trustee will consider in a bankruptcy. They will look at the equity in the home. If it is more than the amount that can be protected, the trustee may sell the property. They will then use the money to pay off creditors.

If a person doesn't file for bankruptcy, they could still lose their home if they don't make payments, or decide not to refinance.

Sometimes people try to prevent foreclosure by filing for Chapter 7 bankruptcy. This can be effective for delaying the foreclosure process and possibly the sale of the home, but it is usually just a delay. Bankruptcies can get very complex, and the more assets a person owns, the more details that have to be considered in a bankruptcy. Because of these complexities and the sensitivity of a person losing their home, it would be wise to consult with a bankruptcy attorney if someone is facing financial hardship and considering bankruptcy.

Source: Fox Business, "Can Bankruptcy Cause Me to Lose My Homes?," Justin Harelik, Feb. 7, 2012