People always ask of a Maywood bankruptcy attorney, will I lose my home or car if I file a bankruptcy?The answer is it depends. If you are filing for a Chapter 13 bankruptcy, you would not lose your house or your car because you will be paying back the debts you have for your house or your car in your Chapter 13 bankruptcy. Furthermore, you can pay your car note monthly through your Chapter 13 bankruptcy as well. Chapter 7 is different, however. Chapter 7 is not a repayment of the debt but a complete elimination of your secured debts. So when one is filing Chapter 7 bankruptcy, they are essentially eliminating those secured debts and they will not be personally liable for any of those debts. However, there is a difference between owing money to a creditor and the creditor having possession of the property that is collateralized for the money that is owed.
So for instance, if a person has a car that they still owe money on and they decide to file a bankruptcy, specifically a Chapter 7 bankruptcy, then the debt will be completely eliminated. However, the possession of the car will not be eliminated. This meaning that a person cannot file bankruptcy and keep car as well as eliminate their debt. The possession of the property still belongs to the creditor whether it’s a mortgage company or an auto finance company. However, this does not mean that the person will have to relinquish the possession of the property, no. What happens is what is called a reaffirmation agreement for the car. The reaffirmation agreement is part of the bankruptcy process and is an agreement with the debtor and the creditor that allows the debtor to continue to make monthly payments on the car and also keep possession of the property. Without signing a reaffirmation agreement, the debtor could be subject to repossession of the car or in the circumstance of a home, the foreclosure of a home. Much like the car, the debtor would continue to make payments to their mortgage company in order for them to keep possession of the property.
So in a Chapter 7 bankruptcy claim, the person has the option to walk away from either a home or a car debt and completely be protected and not personally liable for the debt. They also have the option to keep the car or the home by making monthly payments for the home or the car. Specifically with the car, a reaffirmation agreement would have to be signed and that agreement would essentially allow the debtor to keep possession of the car but would also make the person make monthly payments until that debt owed to the creditor is paid in full. So if a person files for either a Chapter 7 or a Chapter 13 bankruptcy, they will not lose their car or their home but will have the opportunity to keep their home if they so wish to. For further information, contact a bankruptcy lawyer in your home town.