Going through a bankruptcy can be a difficult experience. One of the most common questions people ask is “What do I get to keep?” This article is designed to answer that question in regards to a Chapter 7 and Chapter 13 bankrupty.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is suitable for people with little money or income and cannot fulfill their financial obligations.
Bankruptcy “exemptions” allow you to keep certain types of property after filing for bankruptcy. There is a list of federal exemptions that are nationwide and another list of exemptions that vary from state to state. The most common forms of exemption are the “homestead exemption” and the “vehicle exemption”. More information on Las Vegas Chapter 7 Bankruptcy.
Retaining Your Home “The Homestead Exemption”
The “homestead exemption” allows a Chapter 7 filer to keep his/her’s home after the bankruptcy. The value of the homestead allowed to be exempt varies from state to state. For example, in Texas no limit is placed on the value of the homestead. However, Alabama places the maximum value to be claimed at $5,000. You must check with your state’s specific bankruptcy laws in order to determine how you can use the homestead exemption.
Additionally, certain states require different proceedings for joint spouse ownership of properties. Also, you are required to continue paying your mortgage in order to keep your property. It’s important to consult with an attorney in this situation.
Keeping Your Vehicle “The Vehicle Exemption”
Another common exemption is the “vehicle exemption”. It is very common for people to keep their cars after filing for bankruptcy. In most states, the vehicle exemption allows you to keep your automobile as long as the equity is valued under $3,000. Of course, check to make sure this is true with your state. To calculate how much equity is in your vehicle, subtract the market value of the vehicle by the amount of money which you owe.
Like the homestead exemption, you must still continue making payments on any loans which you have on your vehicle.
Other Exempted Property
Household appliances, clothing, jewelry that is exceeding a certain value, life insurance, alimony, child support, retirement plans and public benefits will not be lost after filing a Chapter 7 bankruptcy. Furthermore, anything that you own which is used in your profession is exempted. For example, a pianist will not lose ownership of his/her piano.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy may be necessary for someone who has decent income, but cannot keep up on his/her obligations. You will be allowed to create a payment plan which will help you pay off your debt, but you will still be required to pay 100% of your debt. Under a Chapter 13 bankruptcy, you will retain ownership over all of your existing assets. A Chapter 13 bankruptcy does not allow your property or assets to be seized. You may find this preferable to a Chapter 7 bankruptcy. Your credit score will also be less impacted by a Chapter 13 bankruptcy as opposed to a Chapter 7. A Chapter 13 bankruptcy may be in your best interests if you are sure you can meet the payment plan’s terms and do not want to lose any control over your assets. As always, consult with your attorney to help you make the right decision. More information on Las Vegas Chapter 13 Bankruptcy.
For more information or a free bankruptcy consultation in Las Vegas, call Freedom Law Firm at 702-803-9251.