Bankruptcy Lawyer | Understanding Chapter 7, 11, and 13 Bankruptcy (Pt. 2)

Bankruptcy Lawyer | Keep Up Your Regular Secured Debt Payments

To protect yourself from foreclosure or repossession, you will need to continue making payments on those loans. this is because Chapter 13 does not eliminate a secured creditor’s lien. Most courts require you make ongoing mortgage payments directly to your lender outside of bankruptcy.  That is not always the case for secured personal property debts like car loans. While some courts will require you to pay the lender directly, others allow you to pay them through your bankruptcy repayment plan.

A lender will have no reason to foreclose on your home or repossess your property as long as you keep up with your regular secured debt payments. If you fall behind on your payments, a lender is able to ask the court for a relief of the automatic stay that is protecting your property from foreclosure or repossession.

Bankruptcy Exceptions Chapter 7

There are exemptions so that you are able to keep a certain amount of property through the bankruptcy so that you are not completely wiped out and have to start all over again.  In a Chapter 7 bankruptcy, if an asset is declared exempt, the bankruptcy trustee is not allowed to sell it as part of the liquidation process to pay your creditors.  The value of the asset and your specific exemptions determine how much you are able to keep, and because of these exemptions, most people that filed Chapter 7 are able to keep all or most of their property.

State and Federal System for Exemptions

Every state, and the federal system, has a set of exemptions.  Some states require you use their own exemptions, while other states allow you to choose between their system and the federal system of exemptions. You will want to work with a bankruptcy attorney to learn which option your state provides. Because of these state-specific laws, where you live greatly determines the amount of property you will be able to protect if you file for Chapter 7 bankruptcy.

The federal system of exemptions (and most states) allow you to keep a certain amount of equity in your house as well as your personal property. For example, this means you can keep your car or the money you have in the bank. Some states offer an unlimited homestead exemption which allows you to keep your home even if you own it free and clear and could make a sizable amount of money from selling it. Typically, household goods and clothing are exempt unless they are unusually valuable.

Exemptions In Chapter 7 Bankruptcy

A Chapter 7 bankruptcy trustee evaluates how much value there is in your property to determine whether or not to take it as part of the bankruptcy. A creditor’s lien is not affected by the bankruptcy if you have loans that secure your property (such as car loans or mortgages). So a trustee will need to pay the creditor the loan amount from the sale. An example of this: your car is worth $15,000, you have a loan on it for $10,000. That means it is only worth $5,000 to the trustee.

In states with car exemptions of $5,000 or greater, then you will not need to worry about the trustee selling it to pay your creditors.  But if the state only allows a $2,000 car exemption, then a trustee may be able to take your car and sell it, pay you the exemption you are entitled to, subtract the costs of sale and the trustee’s commission, and then distribute the rest among your creditors.

You are able to combine certain exemptions to save your property.  The federal exemptions system and certain states systems employ a wildcard exemption that can be used to exempt any piece of property.

Trustee Abandons Property

A trustee can still decide not to take an asset, this is called “abandoning it.” This happens if the value of the asset is only slightly more than your exemption amount.  Often times this happens because the costs and fees associated with selling the asset eat up the equity so much that there isn’t anything left for the creditors. So if a trustee abandons the property, you get to keep it.  – Simone Resnik

Specializing in bankruptcy and foreclosure law for over 20 years. Call attorney David Pinkston for a free consultation today: 904.306.5791. #FloridaBankruptcyAttorney #FloridaBankruptcy

If you are thinking about #bankruptcy or #foreclosure in the Jacksonville, Florida area, you should call attorney David Pinkston. David is very experienced with all aspects of bankruptcy law yet very personable and easy to talk to. Call Us Today! 904.306.5791