Filing chapter 7 bankruptcy Is a big decision that comes with many worries and questions. Some of those worries include whether you can keep your house or whether you can keep an automobile in a chapter 7 bankruptcy.
The equity in your home and your automobile is protected by “exempting” it from your chapter 7 bankruptcy case. Every state has different rules on what property the debtor is allowed to protect and what value the debtor is allowed protect or “exempt” for that property. (this is listed as your state’s exemptions). Each state also determines whether its residents can use the state exemptions, the federal exemptions or whether you have the ability to choose what works best for your situation.
If you file for Chapter 7 bankruptcy, generally you can keep your house as long as:
- The equity in your home is fully exempt, which means fully protected by the state laws of bankruptcy, and
- As long as you are current on your home.
If you have fallen behind on your house, a chapter 7 will not help you keep your house or get current on your house payments. A chapter 7 may help you remain in your home a bit longer – but inevitably will result in foreclosure. At this point, a Chapter 13 could be a viable option to help you keep your house; as long as your income allows for you to provide for a chapter 13 payment and cure the arrears on the home
If you file for Chapter 7 bankruptcy, generally you can keep your automobile as long as:
- The equity in your automobile is fully exempt, which means fully protected by the state laws of bankruptcy, and
- As long as you are current on your automobile.
As with a house, if you are behind on your automobile, a chapter 7 will not help you keep your automobile or get current on your automobile payments.
by Dawn Ravn