Posted on: 23 September 2017
One of the concerns that people have when filing for bankruptcy is whether they get to keep their homes and cars. When you file for bankruptcy, there is a possibility that you could lose some of your assets. Whether your car or home is one of those lost assets depends on certain factors. If you are planning to file, here is what you need to know about keeping your home or car.
Can You Lose Your Home or Car in a Chapter 7?
Before determining whether you could possibly lose your home or car, it is important to understand how you could lose them. Most people mistakenly believe that the only way to lose your car or home after filing for bankruptcy is to seizure by the bankruptcy trustee. Although he or she could take your car or home if it is paid off, you could also lose out to your creditor if the car or home is not paid off.
If you have fallen behind on your mortgage or car loan payments, the lender could choose to take possession of the property. It Is important to note that this will likely not happen right away. The automatic stay on your creditors' actions would prevent a repossession or foreclosure. However, once the stay is lifted, your creditor could act.
What If You Want to Keep Your Home or Car?
If you are filing for a Chapter 7 and want to keep your home or car, you need to act quickly. Remember, you only have the duration of the stay to find a resolution. There are a few options available to you.
You could try to re-negotiate the terms of your mortgage or car loan to allow you to continue to make payments. In some instances, the lender might be willing to forgo the interest left on the loan and allow you to pay only the principle.
Another option is to gather the funds needed to catch up on your payments. The stay usually stays in effect until the bankruptcy is completed in court. You could potentially have months to raise the money. However, there is a possibility that your creditor will ask the court to lift the stay. If the court agrees, the lender can move forward with taking possession of your home or car.
You can also choose to change your Chapter 7 filing to a Chapter 13. The new filing would allow you to keep your possessions and make payments on your debt. Your attorney and bankruptcy trustee will create a repayment plan to cover your debts.Share