Filing bankruptcy can give you a fresh start in life by discharging debt and freeing up money to cover living expenses. But people often wonder if they’ll need to give up property such as their car or home in order to take advantage of bankruptcy. There are even urban legends out there of people losing everything, down to their clothes and bed, but let me assure you that you will not end up destitute because of bankruptcy. There are laws in place to protect you and your assets.
Is Bankruptcy a Good Choice?
Bankruptcy is a legal option to help people get back on their feet after suffering with financial challenges. The goal is to help people start over and move forward, which would be difficult to do if it meant losing everything. Bankruptcy is a solution, not a punishment.
Property is treated differently, depending on your income, expenses, actual value of the property, and also which type of bankruptcy you’ve chosen. For this reason, having an experience attorney help you through the process is imperative. I’m familiar with all the ins and outs of bankruptcy law and can help you make the best possible choices to protect your assets.
Many people prefer to file a Chapter 7 bankruptcy so that most of their unsecured debt, such as credit cards, medical bills, personal loans, and utilities is discharged. Secured debt, such as homes and autos, are taken on a case-by-case basis. Some people use their bankruptcy as an opportunity to get out of payments they can no longer afford, and choose to surrender their property. But if you want to keep your car or home, your best bet is to stay current on payments and keep them insured.
Chapter 7 bankruptcies are designed for people who do not have enough money to pay off their debt, as evidenced by the Means Test. Looking at your debt, income, and assets, most of these bankruptcies are considered “no asset” cases and you can keep your property.
However, if you own your vehicle and it is worth a significant amount, there is a chance the court trustee will choose to sell it and use the profit to pay your creditors. In this situation, you will be given the opportunity to “buy back” your car or to surrender it. If your car is worth more than you owe, you are generally safe, as long as you’re up to date on payments.
People who own valuable property and have some money available to make payments often choose a Chapter 13 bankruptcy. By sticking to a 3-5 year reduced repayment plan, you can keep your property. At the end of your repayment period, the remainder of your debt is discharged, which means you end up paying much less than you originally owed, while still keeping your belongings.
I Can Help
When it comes to your property and livelihood, you want to make sure you have all the information you need to make good decisions. With my years of experience, I’m here to evaluate your situation and walk you through the process. If you’re concerned about how bankruptcy might affect your property, give me a call. We’ll work together to help you get back on your feet.