Going through a Chapter 7 bankruptcy can be one of the most stressful moments in a person's life. One way that this process becomes even more burdensome is the way real estate is treated in the disposition process. While a homeowner can claim a homestead exemption, meaning the property can't be dissolved to resolve the debt, that does not prevent a home from being foreclosed upon if the borrower doesn't have the income to cover the mortgage payments.
One possible solution to this problem is to allow the disposition of property through auction similar to HUD's Claims Without Conveyance Title (CWCOT) program. Mortgagees and trustees could agree to reserve prices and set other parameters that are in the best interests of all parties. This could lead to fewer objections from the mortgagee and a reduced chance of the property going into foreclosure.