Keep Home When Payments are Current – Bankruptcy

You definitely have the ability to keep your house and car in a Chapter 7 Bankruptcy if you are current on your payments, provided you do not have significant nonexempt equity in those properties.  Most people who come to see me for a Chapter 7 and who may be homeowners do not have significant equity.  It is definitely the norm for people to have very little in the way of equity in the real estate.  In those cases, they can continue to make their first and/or second mortgage payment and keep the property free and clear from creditors and from the trustee.

In terms of vehicles, once again, most people do not have significant equity above and beyond the exemption amount in a vehicle.  Most people I see either over more on the vehicle than what it’s worth or are pretty close to breaking even.  Since I can protect $2400 of equity as well as utilize any portion of a $4000 wildcard exemption, I definitely have the ability to protect quite a bit of equity in a vehicle.

The key with the vehicle and the house post-filing Chapter 7 Bankruptcy is that the debtor continues to make timely payments on those items.  If not, the creditor can either bring a Motion to Modify the Stay and then either repossess or begin foreclosure proceedings on the particular piece of property.  So as long as the debtor continues to make payments and as long as there is not significant nonexempt property in those items, then the debtor would be able to continue to make payments on both a mortgage and a vehicle and still get Chapter 7 bankruptcy protection.


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