This is another common question I am asked. Bankruptcy law is complex field and there are countless situations each leading to a different conclusion. In this blog, I will attempt to provide a brief and general answer that should be understandable to those not experienced in the legal field.
As a general answer the question, YES!
Filing for a Chapter 7 bankruptcy does not mean you are going to lose everything, if anything!
A debtor who files for chapter 7 bankrutcy relief must list all assets and liabilities. Each debtor is entitled to a set of “exemptions” which allow the debtor keep personal property (such a car or a house) depending on the value of the property and the amount of equity in such property. If a personal property item, such as a car or house, has no equity, then the assigned bankruptcy trustee will typically not have an interest in acquiring and selling the property. If the personal property item has equity at the time of filing, then the debtor may apply certain exemptions to protect the asset from being acquired and sold by the assigned bankruptcy trustee.
As for any secured personal property item, if the debtor intends to keep the personal property, it is crucial the debtor remains current on mortgage payments/car payments to avoid a foreclosure/repossession of the personal property. In the event the debtor has fallen behind on payments, the filing of a bankruptcy may allow the debtor to keep the property depending on the type of property, bankruptcy chapter filed, and other relevant factors. Thus, in almost any scenario, the debtor should benefit by filing for bankruptcy protection.
As I said initially, bankruptcy law is complicated, especially when deciding what property can be exempt and/or kept. As a highly skilled bankruptcy attorney, I make it my goal to provide each client dedicated the time and experience to file the optimal bankruptcy tailored to fulfill a debtor’s possible expectations.