If we sold our home in bancruptcy, what would be the outcome for both making a profit and taking a loss?

Once you are in the bankruptcy process, you cannot simply get out of it or not follow the rules. If you were to sell your house during a chapter 13 bankruptcy, the amount you sell your house for Maes cover the mortgage and all arrears. You can never sell your house for less money then you owe to the bank. As you didn't have a problem with filing bankruptcy, then you are best route would be to convert your chapter 13 bankruptcy to a chapter 7 bankruptcy and surrender the house. This would get rid of your debt on the house and would also prevent you from having any IRS tax obligations due to a deficiency between the auction sale price and the amount still owed on the mortgage. Remember that the home is secured debt, there is no way around secured debt unless you surrender the property. But when you surrender home and there's a deficiency between the sale price and what remains on the mortgage, the bank will report that to the IRS as a loss on their side and will reported to the IRS as income for your tax return for that taxable year. Filing chapter 7 bankruptcy would prevent this. If you cannot convert from a chapter 13 bankruptcy to a chapter 7 bankruptcy, you can simply surrender the home in the chapter 13 bankruptcy and continue making payments on your unsecured debt. I have responded to your inquiry according to the laws of Massachusetts, where my firm is located. Laws can vary significantly from state to state and cases tend to be rather fact-specific, so you are best served by consulting with a knowledgeable attorney in weighing your options. Email messages/Online Correspondence are akin to conversations and do not reflect the level of analysis applied to formal legal opinions. Email/Online responses do not form an attorney-client relationship.    Joseph F. Botelho, Esq. BOTELHO LAW GROUP Attorneys At Law http://fallriverbankruptcyattorney.com/ 901 Eastern Ave.  Unit 2 Fall River, MA 02723  Office:  888-269-0688 FAX:    877-475-8147