Deciding whether to file for bankruptcy is an agonizing decision especially if you believe that you might lose your home in the process. You shouldn't lose your home if you file for bankruptcy protection, but there are things you should know before going through with your decision.

If you have not been paying your mortgage a lender will call and send you letters to try and work out a modification on your loan. If you choose to ignore the lender, the property will go into foreclosure and you could lose your home.

The other way you could lose your home is by filing for Chapter 7 bankruptcy and your home has more equity than the bankruptcy can protect. If this is the case, the trustee assigned to your bankruptcy, may sell the property to pay off your creditors. Before you file for bankruptcy, you should look into how much equity your home has and what its fair market value is so that you don't get into this situation.

With the recent mortgage crisis, many homeowners are underwater in regards to what they owe on their homes compared to what it's worth. For those that have missed payments and are in the foreclosure process, may file for bankruptcy close to the foreclosure sale in the hopes that filing will protect their home and buy them more time to work out a modification. This is not necessarily the case. The filing will stop the sale of the property, but only temporarily, usually six weeks to several months. In this instance, the lender will file a motion with the court allowing the property to be removed from bankruptcy protection to complete the foreclosure process.

While there is nothing easy about making the decision to file for bankruptcy, you should enlist the help of a bankruptcy attorney. They can determine if filing for bankruptcy or allowing a short sale or foreclosure on your home, is in your best interest. They understand the different types of bankruptcy and will work with you to help you build a secure financial future.

Source: Foxbusiness.com, "Can Bankruptcy Cause Me to Lose My Home?" Justin Harelik, Feb. 7, 2012