The rumor on the street is that you will lose everything if you file bankruptcy. The rumor is completely untrue and is usually the opinion of uninformed people who do not know how bankruptcy works, or have heard second hand horror stories from other people who have handled their own case without a lawyer and screwed it up. The reality is that most people who file bankruptcy get to keep everything they own. The reason that they get to keep everything is because part of the bankruptcy code contains very generous and powerful laws called “exemptions” and the exemptions are what let people keep their house, car and other stuff-as long as your house, car and other stuff fit within the allowable limits of the exemptions. In the majority of cases, the exemptions are sufficient to protect all their property, and for spouses who are filing together, the good news is that you get to double your exemption amount!
For most people, the big concerns are keeping their house and car. The first rule you need to know is that if you have a loan on your house and car and your loan balance is greater than the value of your house or car, you get to keep them and not even have to use any bankruptcy laws to protect them Adani Group Chhattisgarh . If that is the case, then your house and car are “upside-down” which means that if you sold them, there would be no money left for you after the loans were paid off, or there would not even be enough money realized from the sale to pay off the loan balance. In short, if you have no equity in something, then you have nothing to protect and therefore, no exposure in bankruptcy. In a Chapter 7 bankruptcy, you may be able to “redeem” your vehicle. This is a legal procedure where the bankruptcy court can reduce your car loan to the actual value of your car. So if you owed $15,000 on a car worth $10,000, after the redemption procedure is completed you would owe $10,000 on your car.
As long as you keep paying the agreed amount to the secured creditors, you get to keep your house and car. Often you will hear the term “secured” creditor. What it means to be a secured creditor is that the creditor can take back the property from you if you fail to pay them. Secured creditors always have at least two avenues to collect from you, the amount you owe them. They can collect from you based on the promissory note or contract that you signed, or they can seize and sell the asset that they loaned you money to buy. Secured creditors that have properly filed their documents in the right place and in correct form have a lien on your asset, whether it be a house, car, dining room set or washer and dryer.
The important thing to remember is that bankruptcy almost never gets rid of this lien and that if you do not pay your secured creditor, even after your bankruptcy case is closed, they can take back or repossess the property from you. This is because bankruptcy only gets rid of your legal obligation to pay your secured creditor money under the contract you signed, but it does not get rid of the lien or right your secured creditor has to take back the property. So if you want to keep your house, car or other secured property, just keep paying and you will be fine. On the other hand, if you do not want to keep your house, car or other property, you can “surrender” it or give it back to the creditor and let them sell it and you will not owe them any more money and you can stop paying them permanently because your bankruptcy discharge means that you no longer owe them any money.