What Will Happen to My Home and Car if I File Bankruptcy?
In most cases, you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you file a chapter 13.
Home and auto lenders generally have a “security interest” in your home or auto (the “collateral”). Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the auto, during or after the bankruptcy case.
There are several ways that you can keep the collateral (your home or auto) after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. This is called reaffirmation. Under certain circumstances, you can pay the creditor the amount that the property you want to keep is worth and wipe-out of the balance of the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase those same goods), you can often keep your property without making any more payments on the debt.
This website does not create an attorney-client relationship. The information on this website does not constitute legal advice. You are urged to obtain the advice of an experienced bankruptcy attorney regarding your personal situation.