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Can I Keep My Home Or Car After I File For Bankruptcy?
Many people wonder what happens to assets like a home or a vehicle in a bankruptcy auction. The good news is that, in many cases, you have an excellent chance of keeping your car and your home, even if you file for Chapter 7 bankruptcy protection.
If your plan is to file a Chapter 13 bankruptcy, keep in mind that the ultimate goal is to settle your debts with all your creditors. This means that over the period of a few years, you will be making regular payments to them via the courts. Once your case is filed, foreclosure and repossession processes are halted, at least temporarily. Once your Chapter 13 Plan is confirmed, and you make the payments as required, foreclosure and repossession processes are dead in the water. No more worries for you, except making the plan payment!
With a Chapter 7 bankruptcy, there is also an excellent chance you will be allowed to keep your car. This is because the court will look at the current value of the vehicle, not the original purchase price. Often, this means the asset is actually a liability if there is more owed on it than it is worth. If there is equity in the vehicle, often that can be kept by you using “exemptions.” With your home, the court will also look closely at the current market value, plus consider the amount – if any – of equity you have in the property. It is not unusual for both these assets to be exempted from sale in order to settle any portion of the debts detailed in the bankruptcy petition.
Keep in mind that if you are filing a Chapter 7 and you are behind on your mortgage or car payments, the lender(s) still have the option of exercising their right to repossess the assets. This is true even if the court has ruled those assets are “exempt” from sale in order to pay off a portion of your total indebtedness. So, stay current on these payments, even if you can’t pay your credit cards in addition to them.
Exemption planning is a critical part of getting your bankruptcy done right. It takes special skill, knowledge, and experience to walk this tightrope well. We have all of that. We can help you! Call today.