There are a lot of wild stories about what it means to file for bankruptcy. I've heard stories about people afraid of losing everything they own. While this could happen, having an attorney to navigate you through the process can help you keep your belongings.
First off, if you file bankruptcy, you will NOT lose all of your property. Most of the time, you can keep most, or even all, of your property.
To keep your property, you first must disclose all of your belongings, assets, real estate, and vehicles. You must tell the court about everything you own. Hiding or lying about property is a Federal crime, and that's the first way you can lose property.
If you file a Chapter 13 Bankruptcy, you repay your creditors in a repayment plan and you can keep all of your property. This means that even if you got behind on payments, you would catch up via your repayment plan. This is an excellent way to prevent foreclosure and repossession!
Otherwise, in a Chapter 7 Bankruptcy, you can continue making payments on your property loans and keep the property. If you want to keep property that is securing a loan, you will need to reaffirm the debt in Chapter 7 bankruptcy. Reaffirmation means that you will continue to pay the loan despite your bankruptcy discharge.
However, if you can't afford the loans on your car, home, or other property, Bankruptcy has options to lower those payments. If not, you can give back any property you cannot afford and start fresh.
Lastly, certain types of property up to a certain dollar amount are exempt from liquidation or creditor seizure. For example, if you own a home, the equity in that home may be exempt depending on the exemptions offered by your state. However, if you own very valuable property, you may need to turn it over to the Bankruptcy court to pay back your creditors.
If you’re filing bankruptcy and want to keep your property, talk to your attorney about the strategies you should use.