How to Keep Your Home and Assets in Bankruptcy

There are certain statutory exemptions and homestead exemptions available to debtors who file for bankruptcy protection, allowing them to keep their home, car and other personal assets if they do not exceed the state or federal statutory allowances. You can choose to reaffirm your mortgage debt or your car loan and continue making your payments or give back your home or car. Chapter 13 allows you to keep all your assets by entering into a court approved repayment plan with your creditors over a 3 to 5 years period. At the end of the term, all your unsecured debt will be discharged. Chapter 7 is a complete liquidation. Your assets, excluding statutory exempt assets, will be sold to pay off your creditors and your unsecured debts will be discharged, excluding debts which are exempted from bankruptcy discharge. It is recommended that you consult with a bankruptcy attorney to determine which Chapter you should file under.

Steps

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    Consult with a bankruptcy attorney to determine which bankruptcy chapter you should file under.
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    Have your attorney file the petition for bankruptcy and all other bankruptcy documents with the US federal bankruptcy court.
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    Check your state statutory bankruptcy exemptions and homestead protection as well as the federal exemptions to determine which assets you can keep.
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    Reaffirm your mortgage loan or car payment loan or give back your home to your lender and your car to your finance company if you are not going to keep them.
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    For Chapter 13, negotiate reduced debt with your creditors and enter into a court approved repayment plan over a 3 to 5 year period with your creditors.
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    Obtain a copy of your bankruptcy discharge.

Tips

  • Chapter 7 bankruptcy is for debtors who have no or little assets and who want to start over without having any debt. You may be able to keep your home, car or other assets by claiming your state or federal bankruptcy exemptions and any homestead exemption available to you as long as the assets do not exceed the statutory allowed amount.
  • Chapter 13 bankruptcy is used by debtors who have substantial assets that they want to retain and who have a steady income to make their payments under the repayment plan.
  • Bankruptcy is complicated and each state has different statutory exemptions and homestead exemptions. It is recommended that you hire a bankruptcy attorney to represent you in court.

Warnings

  • Certain debts cannot be wiped out in bankruptcy such as child support and spousal support payments, student loans, taxes, except federal income taxes that are three years old or older, court fees, personal injury claims and amounts you owe as a result of committing larceny or fraud.
  • Bankruptcy is used as a last report when you have no other options to solving your financial problems and paying your debts.


Article Info

Categories: Bankruptcy