If I declare bankruptcy can I keep my house and car?

The answer, like most answers in bankruptcy is “maybe.”

Bankruptcy law is a mix of state and federal law. That is why this post will be fairly general and will reference other sites from across the nation. It is important to talk with a local bankruptcy attorney to both take full advantage of your state’s laws and to comply with them fully.

Under Chapter 7

If you have an up-to-date mortgage and can continue making your payments, you should be able to keep your house. Similarly if you are up to date on your car payments, you should be able to keep your car.

Each state has its own bankruptcy rules. In those rules, it states how much home or auto exemption you are allowed. An exemption is the amount that you get to keep automatically.

If you have paid off your mortgage or car, then you get keep the car and/or house as long as they are not worth more than the state’s allowed exemption for those items. If the house and car are worth more than that, then you can sometimes make a deal with the trustee, the person who oversees your bankruptcy case, to pay off the balance in order to keep the house or car.

Under Chapter 13

Even if you are behind in your home and car payments, you can work with your attorney and possibly figure out a deal that will allow you to catch up on those payments and keep your house and car.

Here are some useful links with more details about what it takes to keep your house and car:

From David J. Kelly, Attorney at Law, P.A.

From Credit info center: how to keep your house and your car.

From Southern Arizona Legal Aid, Inc.

 

 

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