One of the first questions that our new clients and first consults ask is whether or not they will lose their property. This is an important topic and needs to be explored.
The first question asked is will they lose their home. It is important for the bankruptcy attorney to confirm the value of your home, the mortgage balance, if any, who is on the deed, husband, wife, both and then calculate the equity in the home and determine the available exemptions. Your bankruptcy attorney must be certain that there are enough exemptions available to exempt your home and protect it. If there is too much equity for the available exemptions, the option of a Chapter 7 case may not exist and you and your attorney will focus on and discuss a Chapter 13 case to ensure the safety of your home.
It is important that you discuss your home and your intentions for your home thoroughly with an experienced bankruptcy attorney to be sure that all possibilities have been explored.
Another frequently asked question from potential bankruptcy filers is “can I keep my car?” Now… assuming that the car in question is not a Porsche 911 that is fully paid for, keeping the car will not likely be a problem. Most of the time, my potential bankruptcy clients have an income issue and are driving a modest car that is financed. In that case reaffirmation of the loan will be under taken and as long as the car loan is paid on time keeping the car will not be an issue.
What about other property in a bankruptcy case? Life Insurance with a Cash value, retirement accounts, pensions.
Since retirement accounts can be protected up to a MILLION DOLLARS, please DO NOT withdraw money from your retirement account to pay creditors until you have talked to an experienced bankruptcy attorney. If you take money out of your retirement account you get hit with penalties and taxes. If you are eligible for a bankruptcy case, you get to keep your retirement money where it belongs AND still get a Fresh Start!
But If You Do Lose Property…Let’s Just Keep This In Perspective
Only in a Chapter 7 case will the Trustee seek to sell property that has value and cannot be protected with an exemption. In Chapter 13 cases the Trustee will not take and sell property, rather the Chapter 13 Trustee will require that you will simply pay, over time, the amount your creditors would have gotten if you filed a Chapter 7 case and the Chapter 7 Trustee sold the property – but you keep the property in Chapter 13!
But even in a case where your attorney advises that there is the likelihood of a loss of some piece of your property be it Real Property or personal property, just keep things in perspective. Consider that by filing a bankruptcy and losing that property, you may find that unburdening yourself from a massive amount of debt you can’t afford and getting a clean slate to start your financial life again, is a total win. You will be free enjoy your Fresh Start and the dramatic reduction in stress that goes with it.
Interested in how we can help you with your bankruptcy case? Give us a call at 732-302-9600 or fill out our online consultation and we will call you! We look forward to hearing from you and answering all your questions!