Filing bankruptcy can feel like hitting the reset button on your financial life, but that doesn’t imply you must lose everything you’ve worked for. When thinking about bankruptcy, one of the most often asked (and stressful) questions people have is, will I lose my house or automobile?
Many people may actually retain both. Let us divide it. First, find out what kind of bankruptcy you’re submitting. For people, there are two basic sorts of bankruptcy.
Chapter 7 Bankruptcy: Liquidation
Most of your unsecured debts—like medical invoices and credit cards—are wiped out by this kind. A trustee might, nevertheless, sell off non-exempt property to pay back creditors. Up to a certain worth, state and federal exemptions safeguard particular kinds of property, including your main house and personal car.
Normally, if: in Chapter 7 you may maintain your vehicle and house. Your vehicle loan payments as well as your mortgage payments are current. Your car or house has equity that is within the exemption cap. After filing, you keep paying.
The trustee may sell your property if you are behind on payments and it is not totally protected, but especially with legal assistance there are ways around this.
Reorganization Under Chapter 13
This kind helps you to keep your property and catch up on missed payments with a court-approved 3–5 year repayment plan. It’s perfect for those with steady income but who require some time to get back on course.
Chapter 13 allows you to keep your car and home. You include the overdue payments in your repayment plan. Going forward, you remain current on your auto payments and mortgage. Often used just to stop foreclosure or repossession is this kind of bankruptcy is used.
Knowing Exemptions: What You May Retain?
Each state has a set of bankruptcy exemptions guiding what property is protected. These exceptions run widely and can cover:
- A homestead exemption saves a particular degree of equity in your house.
- protects equity in your vehicle
- Wildcard exemptions may be used on any property.
Usually, that asset is secure—even in Chapter 7—if your home or vehicle equity is below the exemption amount.
This post was written by Trey Wright, a Chapter 11 Bankruptcy Lawyer in Jacksonville, FL! Trey is one of the founding partners of Bruner Wright, P.A., Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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