Most people do not lose their home or their car because of bankruptcy. Here is a brief rundown of the top ways to save these assets during bankruptcy:
Stop foreclosure: If you’re behind on your mortgage payments, filing bankruptcy will stop foreclosure (at least temporarily). In Chapter 13 bankruptcy, you can even catch up on missed payments and pay the arrears over time.
Homestead exemption: The California homestead exemption is between $75,00 and $175,000, depending on your age, marital status, and other factors. This exemption is normally enough so that most people don’t lose their homes in Chapter 7 bankruptcy. Otherwise, Chapter 13 bankruptcy may provide additional protections to save your home.
Automobile exemption: California bankruptcy law exempts some of the equity in your personal or work vehicle from bankruptcy. The exemption usually protects most people from losing a car so they can still get to work and conduct their lives normally.
Reaffirmation of debt: If you want to keep certain assets in bankruptcy, another option is to “reaffirm” those debts. In a “reaffirmation,” you promise to pay your creditor and keep the asset, rather than it being lumped in with the rest of your bankruptcy case. For instance, if you want to keep your car, you may be able to “reaffirm” your car loan rather than having it be discharged in bankruptcy. In return, your creditor promises not to repossess your car as long as you continue to make the payments.
Figuring out how to apply the exemptions to your own assets can be confusing, as the amounts can vary depending on several factors. The important thing is that you don’t have to lose everything if you file bankruptcy. An experienced California bankruptcy attorney can work with you to determine the best approach to take in your unique circumstances.
Call Denton Law Group at (619) 458-3739 to discuss how these options would work in your particular financial situation. Call today to schedule a free consultation.