Bankruptcy: How Filing Does Not Automatically Mean You Will Lose Your Home Or Car
Most people who file for bankruptcy are led to belive that creditors will come and take their possessions from them; however, all states have exemptions to stop a bank or loan holder from simply taking someone’s stuff. California laws have stated that exemptions do exist which allow people who file for Chapter 7 or Chapter 13 bankruptcy to keep many of their personal belongings. Each of these exemptions will hinge on the value of each item, and most lawyers will inform you of these qualifications before you file. If you are one of the millions of people considering filing for bankruptcy but fear losing your personal belongings, you may want to see what you can and cannot keep.
Property You May Keep
When you finally decide to complete the paperwork for bankruptcy and pay the fees, the next step is normally to hire a lawyer to help deal with the rest of the proceedings, and what most attorneys will inform you of is that most, if not all of your belongings can be saved. For instance, exemptions will be applied to the value of the property, meaning that if you have $10,000 worth of equity in your home, your exemptions are for equity. Your exemptions will go toward the value of the possession, not how much you paid for it, so for instance, a $35,000 car may only be worth $12,000 today. Any Woodland Hills bankruptcy attorney will tell you that your exemptions make it safe from creditors; however, that does not mean that exemptions will cancel out the rights of a loan or mortgage holder from taking your possessions if you are behind on payments.
Chapter 13 will reorganize your payment plans, and as long as all your items meet the new qualifications with the new payment plan, you will get to hold on to your property. With Chapter 13, the new payment plans will still enable a person to make his mortgage payments, but the new payments will be minimized as a result of bankruptcy.
Home and Cars Under Chapter 13
Some people will also find that their home may not fully qualify for an exemption, but California law has loopholes for still enabling individuals to keep their homes. One of the methods to keep creditors from taking your home or vehicle is to pay the non-exempt value of the possession if your home, car or belongings do not qualify for the full exemption. While you may be able to have a car or home qualify for a non-exempt value, if the item has security interests, the creditor does have the power to take it and resell it. Your lawyer, whether he’s a Los Angeles or Thousand Oaks bankruptcy attorney, will also tell you that any inheritance, life insurance and even property settlement cash can be taken from you by creditors.