The major factor that plays a role in what property you may lose when filing for Bankruptcy, is the type of bankruptcy you file: Chapter 7 or Chapter 13. If you file Chapter 7 bankruptcy, you may lose some property and personal belongings that are not exempt. In short, you will lose property you cannot afford to keep or property not protected under bankruptcy laws. In many bankruptcy situations, individuals can maintain some property they own. Property that is of a high value or items you no longer wish to pay a loan on, though, will not remain with you.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, you are not likely to lose any of your property unless you no longer wish to maintain it. In this form of bankruptcy, the court will work with you to reorganize your debt to make it easier to repay. You continue to pay on your debt for three to five years. After this point, any remaining debt (of unsecured loans) is discharged. If you own assets, such as a home with significant equity or several vehicles, you may wish to file this chapter. It helps to protect your assets from loss.
If you no longer wish to maintain a loan, you may be able to hand the property to the lender and not have to repay the debt, dependent on the type of terms the court decides upon. For example, if you no longer want to pay your car loan, you may be able to forfeit the vehicle.
Chapter 7 Bankruptcy
When most people ask, “what property will I lose in bankruptcy,” they are focusing on this form of bankruptcy. Here, the court requires you to relinquish excessive assets to your lender as part of a repayment plan. Non-exempt assets are sold and then the funds are used to repay some of your debts. Do not be discouraged. Even in this form of bankruptcy and with the right attorney, some of your assets will remain protected.
Bankruptcy exemptions come into play with what assets you can keep. An exemption is a specific protection provided under bankruptcy law and is state specific. These vary by state, though some are protected under federal exemptions. If the property qualifies as an exemption, it is not sold during the bankruptcy process. You are able to maintain that property. All nonexempt property, on the other hand, is obtained by the bankruptcy trustee (the person appointed by the court to handle your case) and sold to repay your creditors.
Before you file Chapter 7 bankruptcy, find an experienced attorney that will work with you to determine what types of property is at risk. For example, the protected property can include things like home furnishings, clothing, and even your retirement accounts. If you own a home that does not have much equity, this is likely to remain in your care. Most people are able to keep one vehicle as well.
So, what will you use?
- Any assets not protected under an exemption
- Items with significant equity, such as a home without a mortgage
- Valuable collections and jewelry
- Sizable savings accounts and some investments
When you work with an experienced bankruptcy attorney, we can provide accurate information about your assets based on what you own and what you owe. When you contact the Law Offices of Jeffrey B. Kelly, we can speak to you about your assets. Call us at 770-809-3099 to schedule an appointment.