Filing bankruptcy can affect your assets in a variety of ways. It all depends on the specific asset, the amount, if any, owed on that asset, and the type of bankruptcy you choose.
Cars and Homes
Most people do not lose their vehicles or homes in a Chapter 7 filing of bankruptcy. You should do whatever possible to be current on your loan or mortgage payments when you file. You might not be eligible to file Chapter 7 if you have a great deal of equity in your car or home. Chapter 7 bankruptcy rarely reduces the amount owed on your car or home, nor will it discharge the debts.
Filing Chapter 13 bankruptcy can allow you to reduce the amount owed on your vehicle. A process known as “cramdown” makes it possible to reduce your payments based on the value of your vehicle if you have owned the vehicle for more than 910 days. Bankruptcy filing does not make it possible to reduce your mortgage. There is a chance this could be possible in the future.
If you are no longer able to afford payments on your home or car, it is possible to surrender either in both Chapter 7 and 13 filings. This might not reduce your Chapter 13 repayment options, so speak with your lawyer before moving forward.
Other Assets
Most people have assets in addition to vehicles and cars. These include clothing, furniture, other personal property, bank accounts, cash, and retirement plans. It is possible to protect these items in a filing by making them exemptions. Social security income is also protected, but it is used to determine future earnings.
Garnishments
Assets are not the only concern when filing bankruptcy. Many people believe that filing bankruptcy results in not having to pay child or spousal support. This is not the case. If you have been ordered by a court to pay child support of any other type of domestic support following a divorce, you will still be responsible for these payments after filing bankruptcy. These payments will be taken into account when arranging a bankruptcy repayment plan.
If you are worried about how bankruptcy will affect your assets, contact the Law Office of Brian R. Lewis.