Should I File for Bankruptcy FAQ

If I file for bankruptcy, can I keep my property?

If you file for Chapter 13 bankruptcy, the answer is yes. In Chapter 13 bankruptcy, you repay all or a portion of your debts through a repayment plan over a period of three to five years. In exchange, you may keep your property (including your car and home), assuming you keep up with payments on any loans secured by the property -- and keep making your repayment plan payments. Your plan will also have to ensure that your creditors will get as much through the Chapter 13 bankruptcy as they would have received in a Chapter 7 bankruptcy. For instance, if you own non-exempt real estate valued at $10,000, your plan will have to pay your unsecured creditors at least $10,000 (less costs of sale and the trustee's commission). (To learn more about Chapter 13 bankruptcy, see Nolo's Chapter 13 Bankruptcy section.)

In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection, sell it, and distribute the proceeds to your creditors. What property is exempt from collection depends primarily on state law. Typically, exemptions include some equity in your home and car, retirement funds, public benefits, and most household goods, furniture, furnishings, clothing (other than furs), appliances, books, and musical instruments. (To learn more about Chapter 7 bankruptcy, see Nolo's Chapter 7 Bankruptcy section.)

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