In light of the recent downturn in the housing market, many people are turning to Chapter 7 bankruptcy as a way to keep their home. However, you must qualify for this type of bankruptcy before you can count on it to keep your house from foreclosure. In the state of New York, if your equity in the home is less than $50,000, the house will be considered exempt from liquidation.
Once you file successfully for bankruptcy, creditors will be required by law to stop harassing you. Ask your bankruptcy lawyer to file an automatic stay requesting that creditors contact your lawyer instead of you; if they continue to harass you, speak to the judge about your situation.
And finally, if you are successful in completing the terms of your Chapter 7 bankruptcy, you will be discharged of all remaining debts.