Is There Any Way To File Bankruptcy And Keep My Car Or My House?

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I actually get asked that almost every consultation and the answer is yes. There’s rules, of course. There’s rules to everything. There are only two parties by in large that are interested in your car and your home. That’s the bankruptcy trustee and the lender.

The bankruptcy trustee just wants to see if there is any nonexempt equity in either one. Of course the equity is the value of the asset minus whatever you owe on it. So the value of your home minus the balance of the mortgages or mortgage or your car’s value minus the balance on the note. So in Colorado you can protect certain amounts of equity depending on a number of factors. For most people under the age of 60 they get a $5000 vehicle exemption. If they are filing jointly that goes to 10,000. I mean you could have 10 vehicles with you know $1000 of equity each or you could have 1 vehicle with $10000 of equity in as long as you are filing jointly you have a exemption of $10000 to protect it.

And then if you are over 60, they just double those exemptions. So the individual gets $10 and couple $20. Also, if you are disabled it’s the same exemption-wise as being over 60. You get to double your exemption there .

On homes it’s a little more generous. They give anyone under 60, $60,000 worth of exempt equity in their home and this is their residence and not a rental or something else they’ve got going on. But their residential home. And then if you are over the age of 60 it bumps up from $60,000 to $90,000 or if you are disabled you have that same spread as well. So, as long as you are not showing more equity then your exemption will protect the trustee doesn’t have any right to come after your home or your vehicle and for most financed vehicle and, unfortunately, for most financed homes in Colorado right now, that’s pretty hard to get over those equity limits. The trustee doesn’t have any right to come and take either. That just leaves the lender and by and large as long as lenders are getting paid, they are pretty happy with you keeping that vehicle or that house and just getting that payment every month. Of course, half of that is just interest they are putting in their pockets.

Now that sort of segues into a another issue called reaffirmation agreement that we probably don’t have time go in into at any great depth right now, but reaffirmation agreements – a quick and dirty definition – it’s just an agreement between you the filer and the lender that you are going to continue making the payments on that loan. The plus side is that most lender will continue to report the payments positively to the credit bureau so those loans help you repair your credit. The downside though is that it takes those loans completely outside the court’s bankruptcy protection. So if you had a vehicle and you signed a reaffirmation agreement and it was approved by the court, say six month after the bankruptcy something terrible was to happen and you couldn’t make the payment and it got repossessed that lender can still come after you for a deficiency amount. The amount of the loan that wasn’t paid off by selling the vehicle. Whereas if you hadn’t signed a affirmation agreement you could still discharge that deficiency amount. There is only a handful of lenders, car lenders in particular, that actually requires reaffirmation agreement to be signed. Ford Motor Credit is the common one. They do require a reaffirmation agreement to be signed but the vast majority – the other 98% of vehicle owner out there in the world couldn’t care less as long as you making the payment and they are getting there on time they’re real happy to take your payment unless you keep the car. In a real quick nutshell that’s a reaffirmation agreements in keeping cars and homes in a bankruptcy.

To continue reading the answer, see the text below or jump to another question using the links below:

  1. How Do You Know If You Qualify For A Bankruptcy?
  2. What Is Unsecured Debt?
  3. What Is The Process Of Bankruptcy Like?
  4. Can A Chapter 13 Be Converted To A Chapter 7?
  5. What Is the Process Of Bankruptcy Like – Part 2
  6. When Is The Best Time To File?
  7. How Can I Rebuild Credit After A Chapter 13?
  8. Can A Chapter 13 Be Amended?
  9. Can Filing Bankruptcy Prevent An Increase In Out Of Court Settlement?
  10. Is There Any Way To File Bankruptcy And Keep My Car Or My House?
  11. Will People From The Bankruptcy Court Send Someone To My House To Look At My Stuff?


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