bruce magness attorney at law 

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 case.

            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.


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