Bankruptcy can feel like a frightening ordeal. It frees you from your debts, but what if you still owe money on your car and home?
If you are considering bankruptcy you may have questions about your house and car. State guidelines and the chapter of bankruptcy filed dictate whether you keep your house and car.
Bankruptcy types
Your bankruptcy will be a Chapter 7 or Chapter 13. Mainly the difference between the two is the exemptions.
Chapter 7 exemptions are strict. Usually, you will pay off as much of your debt as possible, so you often do not keep assets like your house or car.
Chapter 13 bankruptcy allows you to create a debt repayment plan and keep a valuable asset. As the debtor, you must complete the proposed payments and then you will remain protected from garnishments and lawsuits.
Things to consider
Even though you may want to keep your home or car, you need to consider if you can keep up with the payments in a Chapter 13 repayment plan. In addition, you also need to make the mortgage and car note payments. Your income decides the repayment plan, and your life would be easier if you did not have a large car note or mortgage to pay as you repay debts.
The decision to declare bankruptcy is a stressful one. Working with an experienced attorney allows you to make the best decisions regarding your financial wellness. Consider asking an attorney which bankruptcy you should file for before making a decision.
