If you file bankruptcy, you will NOT lose all of your property. In fact, in most cases, you can keep most or even all of your property. Let’s take a closer look at the factors that determine the status of your property in bankruptcy.
Type of Bankruptcy
If you’re filing Chapter 13 bankruptcy, you will repay your creditors on a 3- to 5-year repayment plan and you will keep all of your property. This means that even if you got behind on payments you would catch up via your repayment plan.
In a Chapter 7 bankruptcy, the status of your property is determined by a few factors:
- Exemptions. Certain types of property up to a certain dollar amount are exempt from liquidation or creditor seizure. For example, if you own a home, the equity in that home may be exempt depending on the exemptions offered by your state.
- Ability to pay. If you file Chapter 7 bankruptcy with an outstanding loan secured by property you want to keep, your ability to repay the loan will determine if you can keep the property. For example, if you took out an auto loan and filed bankruptcy, you would need to continue repaying the loan to keep your car.
- Reaffirmation. If you want to keep property that is securing a loan, you will need to reaffirm the debt in Chapter 7 bankruptcy. Reaffirmation means that you will continue to pay the loan despite your bankruptcy discharge.
If you’re filing bankruptcy and want to keep your property, talk to your attorney about the strategies you should use.