What Property Can I Keep?

In a chapter 7 case, you can keep all property that the law says is exempt from the claims of creditors.  You can choose between your exemptions under your state law.  Unless I have told you otherwise you should expect to keep all of your property.

This includes:

1. Unlimited equity in your home;
2. Up to $1,000 in equity per person in your car;
3. $4,000 per person equity in any household goods (this is not the price that the item sold for when purchased but rather what you could sell the item for now in the newspaper or at a garage sale);
4. Unlimited amount of retirement, IRAs, 401 (K) or any other retirement or pension plans;
5. Unlimited amounts in life insurance or annuities;
6. Your right to receive certain benefits such as social security, unemployment compensation, veteran's benefits, public assistance, retirement accounts and pensions-regardless of the amount.

In determining whether property is exempt, you must keep a few things in mind.  The value of the property is not the amount you paid for it, but what it is worth now.  Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.

You also only need to look at your equity in property.  This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens.  For example, if you own a $10,000 car with a $9,000.00 lien, you count your exemptions against the $1,000.00, which is your equity, if you sell the property.

While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind in your payments.  In a chapter 13 case, you can keep all of your property if your Chapter 13 plan meets the requirements of the bankruptcy law.  In most cases you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.

What Will Happen To My Home and My Car If I File Bankruptcy?

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt.  Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in a chapter 13 or in a buy back to a chapter 7 trustee over a shorter length of time. 

However, some of your creditors may have a security interest in your home, automobile or other personal property.  This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt.  Bankruptcy does not make these security interest go away.  If you don't make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.

There are several ways that you can keep collateral or mortgaged property after you file bankruptcy.  You can agree to keep making your payments on the debt until it is paid in full.  Or you can pay the creditor the amount that the property you want to keep is worth.  In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt.  If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

Can I Own Anything After Bankruptcy?

Yes!  Many people believe they cannot own anything for a period of time after filing for bankruptcy.  This is not true.  You can keep your exempt property and anything you obtain after the bankruptcy is filed.  However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

Will Bankruptcy Wipe Out All My Debts?

Yes, with some exceptions.  Bankruptcy will not normally wipe out:

1. Money owed for child support or alimony, fines and some taxes;
2. Debts not listed on your bankruptcy petition;
3. Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
4. Debts resulting from willful and malicious harm;
5. Student loans owed to a school or government body, which are federally backed;
6. Mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

Will I Have To Go To Court?

In most bankruptcy cases, you only have to go to a proceeding called the meeting of creditors to meet with the bankruptcy trustee and any creditor who chooses to come.  Most of the time, this meeting goes smoothly without incident.  However, at times, the meetings can become more involved.  I make it very easy for you because the trustee will easily understand your documents, which we have prepared.  I will attend the meeting with you.  I will meet you before the hearing at the court to prepare you for the hearing.

Occasionally, if complications arise, or if you choose to dispute a debt, we may have to reappear before a judge at a hearing.

You will receive your court date from the court about three (3) weeks before the hearing.  We also send you a copy of your bankruptcy papers to review so that you will be fully prepared for the hearing

Will Bankruptcy Affect My Credit?

 There is no clear answer to this question.  Unfortunately, if you are behind on your bills, your credit may already be bad.  Bankruptcy will probably not make things any worse.

 The fact that you've filed a bankruptcy can appear on your credit record for seven to ten years.  But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills and you may be able to get new credit.  You should expect to wait two (2) years before you can qualify for a home loan (it generally takes people that long or longer to save for the down payment anyway).

What Else Should I Know?

 Utility Services Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy.  However, the utility company can require a deposit for future service and you do have to pay bills that arise after the bankruptcy is filed.

 Discrimination  An employer or government agency cannot discriminate against you because you have filed for bankruptcy.

 Driver's License If you lost your license solely because you couldn't pay court-ordered damages caused in an accident, bankruptcy will all you to get your license back.

 Co-signers  If someone has co-signed on a loan with you and you file for bankruptcy, the co-signer will still remain liable and have to pay your debt.

Bankruptcy Case Timeline

1. $250.00 deposit-With the $250.00 deposit my office does the following:
   1. We create your case file;
   2. We place your information in our database and begin accepting calls from your creditors.  (We explain to them that you are filing for bankruptcy and admonish them not to harass you concerning the debt.  You should realize that, most commercial creditors, once they verify with my office that you are filing for bankruptcy will update their files and stop contacting you until you actually file your case).
   3. If you have returned your questionnaire we begin preparing the bankruptcy petition.    
2. Final payment- Once, the final payment is received and we have your questionnaire, we finalize your bankruptcy paperwork.  Then, within one week of receiving the payment (unless it is an emergency e.g. a repossession, wage garnishment, or foreclosure is imminent in which case your case is filed immediately) your case is filed with the court.  By filing your case your creditors must immediately, upon receiving notice of the case, cease all collection efforts.
3. Within a week or two after your case is filed, you will receive your court date in the mail from the court.  This will happen about three (3) weeks before your court date.
4. 4-6 weeks after your case is filed we will attend your 341 meeting of creditors.  This should be your only court hearing.  Virtually all of the issues in your case will be handled at this time.  About a week or two before your hearing, my office will send you a letter explaining a little about the hearing and a reminder notice of the time of your court hearing along with the address of the court.  I will meet with you before the hearing to review the court procedure with you.