When individuals seek to avoid the liquidation of their assets during a bankruptcy filing process, they may wonder if their property can be kept. The answer is complex and depends on several factors.
Secured debts, such as mortgages and car loans, are considered property because they have a tangible value that can be foreclosed upon in the event of non-payment. However, during the bankruptcy process, creditors may still pursue these debts, especially if the individual has not made any payments on time.
Under federal law, Chapter 13 bankruptcy allows individuals to keep their property, including their home and car, as long as they have a valid exemption for such assets. The exemptions vary by state, but generally include items like cash, tools, and personal effects worth up to $5,000.
For mortgages, the situation is more complex. According to the U.S. Department of Justice, federal courts can consider foreclosure when a debtor has not made at least 70 payments on their mortgage or if they have already received a partial payment from a creditor. However, some creditors may still pursue foreclosure even with a valid exemption.
The exemptions available in Chapter 13 bankruptcy vary by state, but common exemptions include:
Learn more about your exemptions and options in a bankruptcy case.