One of the most common concerns that people have of a Schiller Park bankruptcy attorney is the important question, can I keep my house and car when filing bankruptcy? In most Chapter 7 bankruptcy cases, the debtor gets to keep all of his personal property. The debtor gets to keep his house, and the debtor gets to keep his car, provided he continues to make monthly payments on those items. When a person comes in to see me for a Chapter 7 bankruptcy, I am going to look at their income, their expenses, their assets and their liabilities. With regard to assets, I am going to ask for the market value of a particular item, and I’m going to ask for the amount owed on a particular item.
Let’s talk about real estate in an individual bankruptcy case. If a house is worth $200,000.00 and the debtor owes $185,000.00 to the mortgage company to pay off the loan, then the debtor has $15,000.00 worth of equity. Equity is ownership in property. In the state of Illinois, you can protect up to $15,000.00 worth of equity in real estate per individual filer. Thus, in a joint Chapter 7 bankruptcy case, we can protect up to $30,000.00 of equity in real estate. In reality, we can protect even more than that because the trustee has to factor in what it’s going to take to sell the property. Once the trustee factors in the cost of sale, which would be realtor’s fees, transfer fees, closing fees, and then pay the debtor the $30,000.00 equity exemption, the amount remaining would be the amount available for creditors who file a proof of claim bankruptcy if there was going to be a distribution by the trustee. Thus, unless the property has significant equity above and beyond the exemption amount, the trustee is not going to touch that piece of property.
The same thing could be said for vehicles. In the state of Illinois, an individual is granted a $2,400.00 exemption in one motor vehicle. If we’re talking about a joint bankruptcy case, then the couple can protect up to $4,800.00 in one vehicle. In addition to the auto exemption, debtors also possess a wildcard exemption of $4,000.00 per person. That $4,000.00 can be sprinkled over any personal property to protect it from the trustee and from creditors. Now, when you meet with your Chapter 7 bankruptcy attorney, the attorney is going to look to see if there is any asset that can be administered. If it’s going to be a close call, the attorney is likely going to have you sign a potential asset acknowledgement.