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Bankruptcy
Can I keep my home and car if I file for bankruptcy?

Can I keep my home and car if I file for bankruptcy?

Full question:

Can I keep my home and automobile if I file bankruptcy?

Category: Bankruptcy
Date: 04/07/2025
State: National

Answer:

In a Chapter 7 bankruptcy, you may be able to keep your home and car. You typically only lose these assets if you're behind on payments and can't negotiate with your creditor, or if the equity in your home or car exceeds the exempt amount. If either situation applies, you might want to consider filing for Chapter 13 bankruptcy. This option allows you to create a repayment plan for your creditors without having to sell your assets. Generally, if you have little or no equity and can continue making your mortgage or car payments, you should be able to keep both. If there is equity in your home or car, Chapter 13 can help protect those assets.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

Will I lose my house if I declare bankruptcy?

Declaring bankruptcy does not automatically mean you will lose your house. In Chapter 7 bankruptcy, you can keep your home if you are current on your mortgage payments and your home equity is below the exempt amount. If you are behind on payments or have significant equity, you might risk losing your home. In such cases, Chapter 13 bankruptcy could be a better option, allowing you to create a repayment plan while keeping your home. Always consult a legal professional for personalized advice.

What happens to my car if I file for bankruptcy?

When you file for bankruptcy, whether you keep your car depends on your equity and payment status. In Chapter 7 bankruptcy, if you are current on payments and your car's equity is within the exempt limit, you can keep it. If you have significant equity or are behind on payments, you may lose the car. Chapter 13 bankruptcy can help protect your vehicle by allowing you to catch up on missed payments through a repayment plan.

Can I keep my assets in Chapter 13 bankruptcy?

Yes, in Chapter 13 bankruptcy, you can keep your assets, including your home and car, as long as you adhere to the repayment plan. This type of bankruptcy allows you to restructure your debts and catch up on missed payments over a period of three to five years. As long as you continue making your payments, you can retain your assets, even if they have equity.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 bankruptcy is a liquidation process where non-exempt assets may be sold to pay creditors, while Chapter 13 bankruptcy allows individuals to keep their assets and create a repayment plan. In Chapter 7, you may lose assets if you're behind on payments or have high equity. In Chapter 13, you can keep your assets by catching up on payments over time. The choice depends on your financial situation and goals.