WHAT PROPERTY CAN I KEEP?

This question involves exemptions that are available to you. Property that is exempt is property that you get to keep. These are things that we go over in a free debt consultation if it appears that the person has property that is not exempt. We don’t go over the details of this because nearly all people that we see do not have a problem keeping all their stuff. If you would like to have a Free Debt Consultation, then call my office at 210-930-7000 to schedule your appointment.

In a Chapter 7 case, you can keep all property that the law says is “exempt” from the claims of your creditors. Property is not just land, it includes everything you own, from socks to stocks.

In determining whether your property is exempt, you must keep a few things in mind. The value of the property is not the amount that you paid for it, but what it is worth now. This is especially important for furniture, cars and personal effects, because today’s value of those items is usually much lower than the original purchase price.

Another important issue is the “equity” in your property. Equity is the value of a person’s interest in property after all liens have been considered. For example, if you have a car valued at $10,000, and you have a loan against it for $7,000, then you have $3,000 equity in the car. (Owing more than the value of the car is often called being “upside down.”) We only have to protect the equity you have in the stuff you own.

Another point you have to consider is the general rule that is present in bankruptcy and outside of bankruptcy: If you want to keep your possessions, you have to continue to pay for your possessions. So, even though your exemptions allow you to keep your car, you still have to continue to pay for your car.

In a Chapter 13 case, you can keep all your stuff, provided that your Chapter 13 plan meets all the requirements of the law. So, when someone has property that they might lose in a Chapter 7 bankruptcy, the alternative is to file a Chapter 13 bankruptcy.

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