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Filing for bankruptcy can be complex, and if you don't do it right, the court can deny you. Attend your 341 meeting, which is the meeting with your creditors. If you have a somewhat higher disposable income as well as earn an amount above the state's median income, you are probably a better fit for Ch 13 bankruptcy.
Keep in mind that these lends may be considered subprime, which means they work with borrowers who have less favorable financial backgrounds. Kevin O’Flaherty is a graduate of the University of Iowa and Chicago-Kent College of Law. He has experience in litigation, estate planning, bankruptcy, real estate, and comprehensive business representation. Depending on the circumstances, you may keep your house to eliminate other debts.
Can I Keep My Car If I File Chapter 7?
In almost all cases, whether in Chapter 7 or Chapter 13 bankruptcy, you will be able to keep you vehicle. When many of our Auburn bankruptcy clients first contact our offices, they are very concerned about losing their vehicle. Unfortunately, there’s a lot of confusion out there regarding filing for bankruptcy and what happens to someone’s care when they do so.
But if you have a lot of equity value, the court may determine you can “afford” to repay more of your debt. First, the court subtracts your mortgage and homestead exemption from the value of your home. Then, the court adds that remaining equity value into your “available” funds that can be used to repay your debts. Exempted property are the assets that you’re allowed to keep. Each state and the federal government sets its own exemption limits. Instead of clearing your debts, you enter a repayment plan, usually for 3-5 years.
How To Declare Bankruptcy In Pa
It’s common for people who are overwhelmed by debts to worry that they might lose all of their property if they file for bankruptcy protection. The fact is that you are able to keep a significant portion of your property when you file for bankruptcy because of the amount of property we can exempt from the bankruptcy process. Each state has a list of state exemptions that people can claim to exempt different types of property from their bankruptcy estates.
The properties that you can safeguard with bankruptcy exemptions depend on the state you’re from. Each state designs its exemption list, which often covers key assets. Items you may be allowed to keep include clothing, work tools, household items, electronics and even sometimes, some equity in a vehicle.
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One of these may be, “Can you file bankruptcy and keep your car? People who file for bankruptcy generally have cars that are of less value than the average consumer, but they also have more of their wealth tied up in their car. The CBP car bankruptcy study points out that makes sense. “People come to bankruptcy court with their wealth depleted, and the data bear out the intuition that people will hold onto their means of transportation if they can,” the study says. If you own the car “free and clear,” it means you’ve finished paying the loan.
Bankruptcy law allows you to exempt, or shield, some of that equity from creditors. So, you'll need to find the amount of your state's motor vehicle exemption and wildcard exemption. Also, check whether the federal bankruptcy exemptions are available in your state to see if you'd be better off using them.
When you file either a Chapter 7 straight bankruptcy or aChapter 13payment plan case, you'll be able to structure it so that you can keep your vehicle. With the $6,000 exemption in equity, filers will not have to pay that amount during their repayment plan because it falls under state exemptions. You can choose to give the car to the lender if you don’t wish to keep it. This allows you to remain in a less balance that you can pay off easily in your repayment plan.
On the other hand, you will be able to keep your house if you are currently paying your house payments and/or the total exemption covers the equity of your home . The best determinate in knowing what property you can keep during a bankruptcy filing is your state’s bankruptcy exemptions. You can pay for your nonexempt in the repayment plan if you wish to keep your car. Lenders allow you to pay a lump sum amount for the cost of the car and you’re allowed to keep it.
Chances are, if you’ve had your car long enough that you paid off the car note, its fair market value is well below the exemption amount. Even when your car is worth more than the exemptions you are entitled to, the trustee may decide not to sell your car so that you can continue to go to work and fulfill your obligations. Add up your allowable expenses, including rent, medical costs, groceries, car expenses such as car payments and insurance, and clothing. This will remove any responsibility you would have had towards the car loan following the bankruptcy. Unfortunately, a surrender resembles a repossession in terms of your credit report. In these unprecedented times, many of us will find ourselves buried in debt and there is no clear path to how to resolve it all.
But that doesn’t mean you’re guaranteed to keep your home. For instance, is your house is worth $100,000, but you owe a $50,000 mortgage, your equity is $50,000. In Chapter 7 bankruptcy, the court can wipe your slate clean. But first, you may have to sell some assets to repay some of your debt.
The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer. If you have a car payment, determine whether it will be current when you file. You can't include sales costs when reporting property values on your bankruptcy paperwork. However, a Chapter 7 trustee will consider sales costs when deciding whether to sell property. Indiana does not have a vehicle exemption, per se, but you can use the state’s “wildcard exemption” to protect equity in your car, truck, or SUV. As an example, let’s say your state exemption is $7,000, and your car is worth $6,000.
It also means that the lender could repossess the car and sue you for adeficiency judgmentif you default on the loan. For Chapter 7 bankruptcy, these state exemptions can protect your assets if their equity value is covered. For Chapter 13, these exemptions can help lower the payments to your creditors and lenders for your repayment plan.
A Chapter 13 bankruptcy is a debt consolidation program designed to help protect your property and re-establish payments with your creditors if you have fallen behind. The program offers many unique benefits that can actually help you keep your vehicle, improve your payment terms and re-establish your credit. You will have the opportunity to get caught up on your car loan if you qualify for a repayment plan. You'll likely lose your car in Chapter 7 if you can't protect all of the vehicle's equity.
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