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 pay its non-exempt value to creditors in Chapter 13. However, some of your creditors may have a "security interest" in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. 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 property, during or after the bankruptcy case. There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
When considering whether bankruptcy is right for you ask yourself the following questions:
1. Do I have too much credit card or ‘unsecured' debt?
2. Do I want to save my house?
You are probably not a great bankruptcy candidate at this stage. Pursuing the foreclosure defense program and a sale or short sale of your home may sufficiently relieve you of your financial problems. You may reconsider the Chapter 7 option in the event the bank is unreasonable on their short sale terms.
Answer: Chapter 7.
Filing a petition under Chapter 7 stops most bill collectors and collection agencies in their tracks. They will no longer be allowed to collect any debts that you may owe. Filing a Chapter 7 will also stop harassing phone calls and any other means employed by unscrupulous collectors in their efforts to collect their debt. Upon filing Chapter 7 notice is sent to all creditors whose names and addresses you provide.
A successfully discharged Chapter 7 releases you from any personal liability for most debts. Not only will you be released from liability but all future collection efforts by the named creditors will stop.
You may ‘reaffirm' debts you wish to keep, i.e., car, house, etc., and keep those separate and distinct from the Chapter 7. You will continue to be liable for any debts you choose to ‘reaffirm.'
1. Yes or No.
Answer: Chapter 13.
If your priority is to save your home then a Chapter 13 is the plan for you. Chapter 13 is the plan within the bankruptcy code that is tailor made for those seeking to save their homes. A Chapter 13 will stop the foreclosure process and give the homeowner the opportunity to cure the late payments on the mortgage over time.
A Chapter 13 requires the homeowner to make current payments on the mortgage while simultaneously setting up an agreeable plan with the Government that cures the late payments on the mortgage within 36-60 months.
Another advantage of the Chapter 13 is that it allows the homeowner to reduce unsecured debt (i.e., credit cards, unsecured value on a car payment, etc.) and reorganize the remaining debt into a more affordable payment schedule. The money saved on unsecured debt payments (credit cards and other unsecured debts are often reduced to $.20-$.30 on the dollar) give the homeowner the extra money they need to save the home and catch-up mortgage payments.
While you are in a Chapter 13 you will have no contact with your creditors. For more information on Chapter 13 please visit our website at www.MyCh13.com)