Any real property owned by a debtor is subject to liquidation by the Trustee in a Chapter 7 Bankruptcy case. But the Trustee will liquidate the property (i.e. sell it and use the proceeds to pay creditors) only if there is equity in the property that can be turned to cash for the creditors.
So if there is a mortgage on the property for $100,000 and the fair market value of the property is $90,000, then the there is no equity and the trustee would have no interest in selling the property.
Details on these and other considerations are detailed within Standard Legal’s Bankruptcy legal forms software package.