Let’s be honest about the question that’s really keeping you up at night. It isn’t the legal jargon. It’s this: if I file for bankruptcy, do I lose my house?
In California, you can keep your home in Chapter 7 as long as your equity fits inside the state’s homestead exemption. In 2026 that exemption protects somewhere between roughly $373,000 and $740,000 of equity, depending on your county. For San Diego homeowners, the protection usually lands at or near the top of that range.
So no, filing doesn’t automatically mean losing your home. Most people who file Chapter 7 keep theirs. Let me walk you through how this actually works…
How Much Equity Can You Have In Your House & File Chapter 7 In California?
You can have as much equity as your county’s homestead exemption protects. For 2026, that’s a floor of about $373,000 and a cap of roughly $740,000, both adjusted for inflation every January 1.
Equity is the value of your home minus what you still owe on it. If your house is worth $600,000 and your mortgage balance is $350,000, your equity is $250,000. That number is what the bankruptcy trustee looks at, not the sticker price of the home.
The homestead exemption is the shield. It lets you protect a chunk of that equity from creditors when you file. California overhauled these rules with AB 1885 back in 2021, replacing the old, painfully low limits with much larger ones tied to local home prices. Because San Diego home values are high, San Diego filers generally get protection at or near the maximum.
Say your San Diego home is worth $700,000 and you owe $400,000. Your equity is $300,000, and since the county’s exemption sits near the cap, that equity is fully protected. The trustee can’t sell your home to pay creditors. You keep it.
Now flip it. Same house, but you only owe $50,000. That’s $650,000 in equity, and part of it may sit above your exemption. In that case a trustee could look at selling, though you’d still get your protected share back in cash. That gap, between your equity and your exemption, is the whole ballgame. Want to go deeper on keeping your home? Read Can I Keep My House After Filing Bankruptcy in San Diego?
One thing to keep in mind. These numbers move every year with inflation, so always confirm the current figure for the year you actually file.
What Is The Income Limit For Chapter 7 In California?
There’s no single income limit. Chapter 7 uses California’s median income for your household size, and those figures reset twice a year, every April and November. As of 2026, the median runs from around $72,000 to $79,000 for a single filer, up to roughly $123,000 to $135,000 for a family of four.
This is the means test. It compares your average monthly income over the last six months to the median for a household your size in California. Fall below the median, and you generally qualify to file Chapter 7 right away. Here’s a snapshot of where the 2026 numbers land:
| Household size | Approx. CA median income (annual) |
| 1 person | Around $72,000 to $79,000 |
| 2 people | Around $93,000 to $100,000 |
| 3 people | Around $105,000 to $112,000 |
| 4 people | Around $123,000 to $135,000 |
| Each additional person | Add about $9,900 to $11,100 |
Treat these as ballpark figures. The exact numbers depend on the filing window and update every April and November, so check the current U.S. Trustee figures before you rely on them.
What if my income is above the median?
Being over the median doesn’t shut the door on Chapter 7. It just moves you to the second part of the means test, which subtracts your actual allowed expenses, like your mortgage, car payment, and taxes, to calculate your disposable income.
If that disposable income is low enough, you can still qualify. If it isn’t, Chapter 13 may be the better path, letting you reorganize and repay over three to five years. Curious how the math works? Here’s a breakdown of the means test and disposable income.
Talk To San Diego Bankruptcy Attorney Before You File
Every case is different, and a small detail in your equity or income can change your whole strategy. That’s exactly the kind of thing you want a real attorney to look at before you make a move.
The Bankruptcy Law Offices of Mark L. Miller have guided San Diego families toward a fresh start for over two decades. Call us in San Diego at (619) 574-0551 or in El Centro at (760) 332-3352, or request your free consultation online. Let’s figure out, together, exactly what you get to keep.
