In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.
However, some of your creditors may have a “security interest” in your home, automobile, or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
In a chapter 13 case, you may be able to keep certain secured property by paying the creditor the value of the property rather than the full amount owed on the debt. Or you can use chapter 13 to catch up on back payments and get current on the loan.
There are also several ways that you can keep collateral or mortgaged property after you file a chapter 7 bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
Source: Answers to Common Bankruptcy Questions Pamphlet
National Consumer Law Center, Boston, MA
www.nclc.org
Remember: The law often changes. Each case is different. This pamphlet is meant to give you general information and not to give you specific legal advice.
Related posts:
- Do I Still Owe Secured Debts (Mortgages, Car Loans) After Bankruptcy? Yes and No. The term “secured debt” applies when you give the lender a mortgage, deed of trust, or lien...
- Do I Have to Reaffirm Car Loans, Home Mortgages? If you are behind on a car loan or a home mortgage and you can afford to catch up, you...
- Can They Take My Home Away from Me if I File Bankruptcy in Kansas? Kansans in financial distress often ask, “Will I will lose my home if I file bankruptcy?“ The simple answer is...
- My Wife Didn't File Bankruptcy, Can I Deduct Her Car Payment on My Means Test? NON DEBTOR EXPENSES NOT ALLOWED ON B22C In re Shahan, Case No. 06-11638 April 2007, Judge Nugent Above median debtor...
- What Can Bankruptcy Do for Me? Bankruptcy may make it possible for you to: Eliminate the legal obligation to pay most or all of your debts. ...
