What Will Happen To
My Home and Car If I File Bankruptcy?
In most cases you will not lose your
home or car during your bankruptcy case as long as
your equity in the property is fully exempt under
either Texas law or Federal law, as discussed above.
Even if your property is not fully exempt, you will
be able to keep it, if you pay its value to
creditors or your Trustee.
Remember, some of your creditors may
have a “security interest” in your home, automobile
or other personal property. This means that you gave
that creditor a mortgage on the home or put your
other property up as collateral for the debt.
Bankruptcy does not make these security interests go
away. If you don’t continue your payments on that
debt, the creditor may be able to take and sell the
home or the property, during or after the bankruptcy
There are several ways that you can keep
collateral or mortgaged property after you file
bankruptcy. You can agree to keep making your
payments on the debt until it is paid in full, as is
generally the case in a Chapter 7. Or you can pay
the creditor the amount that the property you want
to keep is worth, which is known as redemption. In
some cases involving fraud or other improper conduct
by the creditor, you may be able to challenge the
debt. If you put up your household goods as
collateral for a loan (other than a loan to purchase
the goods), you can usually keep your property
without making any more payments on that debt.
In a Chapter 13, you will simply
consolidate the arrearages, if any, on your home
mortgage with the security interest on the car and
any other debts and pay one payment under your plan,
which will result in your keeping the house, car and
other exempt property and discharging that which
your Trustee agrees you cannot afford to pay.