You Could Keep Your Car Through The Motor Vehicle Exemption
You need to check whether your state has laws on Motor Vehicle Exemption . State and federal exemptions will be able to protect some or all of the equity that you have on your car.
Depending on where you reside, the amount of equity that can be exempted from your vehicle will vary. Some states, however, will allow you to use the exemption amount set by the federal government to keep your auto.
The federal exemption on motor vehicles is currently set at $4,000. Some states have a lower exempt value, while others are more generous. Texas, for instance, will allow you to exempt the entire value of one vehicle per licensed household member.
Using Wildcard Exemptions To Protect Your Car
If the motor vehicle exemption doesn’t cover all of the vehicle equity, you might be able to use a wildcard exemption to protect a certain amount of property of your choosing. A wildcard exemption protects any property of your choosing.
In some states, you can also apply any unused portion of the homestead exemption to other assets. These exemptions can be added to your motor vehicle exemption to protect your car equity.
Example. Hannah has $4,000 in equity in her car. Her state allows debtors to exempt up to $3,500 in a car. It also has a $1,000 wildcard exemption. Hannah can protect her car by using $3,500 of the motor vehicle exemption and $500 of the wildcard exemption.
What Does It Cost To File For Bankruptcy
The Bankruptcy Court collects a fee to file a bankruptcy petition. It now costs $299 to file for bankruptcy under chapter 7 and $274 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney to represent you in your bankruptcy case you will also have to pay the attorneys fees you agree to.
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Can A Bankruptcy Trustee Take My Home
Itâs not common, but itâs possible in certain circumstances.
The bankruptcy trusteeâs job is to sell non-exempt property for the benefit of unsecured creditors. That includes personal property and real property. Whether your home is safe from the trustee depends on whether it has any ânonexempt equityâ which in turn depends on its market value.
As a reminder, hereâs how we calculate equity in this scenario:
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Discuss Your Bankruptcy Alternatives To Keeping Your Home
Worrying about your home and your family is natural. For most people its not the mortgage thats the problem its the credit cards, lines of credit, payday loans and other bills.
At Hoyes Michalos, we can help. In many cases you can file bankruptcy and keep your home and keep your car if you claim bankruptcy.
For over half of the people we meet with a bankruptcy is NOT necessary a consumer proposal is a better solution and even if you do file bankruptcy, we still offer alternatives.
The longer you wait, the greater the risk that you fall behind on your mortgage payments, and that will put your hard-earned assets at risk.
There are other factors to consider before deciding if a proposal is the correct option, so if you or someone you know is in a similar situation, we recommend you discuss your individual situation with a bankruptcy trustee. With offices across Ontario, we can help you review your options.
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What Does That Mean For You
If youâre current with your mortgage payments â¡ï¸ everything will stay basically the same.
Youâll continue to make your mortgage payments until the house is paid off. Of course, there are some legal nuances, like the discharge of your personal liability on the home loan, and how it protects you in the event you lose your home down the road, but the important takeaway here is this:
If you have enough income to pay your mortgage lender, you can keep your home even after filing Chapter 7 bankruptcy.
Itâs a little more complicated if your home is worth more than what you owe on your mortgage. In that case, you may have to deal with the bankruptcy trustee. More on that below.
Let An Attorney Help You Keep Your Home After A Bankruptcy
The decision to declare bankruptcy often comes at an overwhelming time of your life. If you’re thinking about declaring bankruptcy, the chances are that you’re worried about how you can manage all your finances now and in the future.
If you’re caught in a financial tailspin a professional can help you identify the right steps to take, even if you’re facing the prospect of losing your home.
Contact a local bankruptcy attorney, who can help develop a personal plan to get your balance sheet back out of the red.
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Available Exemptions For Oklahoma Chapter 7 Bankruptcies
Can I file bankruptcy and keep my house in Oklahoma? In Oklahoma, you are not allowed to choose the federal exemptions and instead must take the Oklahoma exemptions. In the state, you can exempt your homestead regardless of its value as long as it is your primary residence. Your exemption is only limited by the amount of your acreage. People who live in towns or cities can exempt up to one acre while those who live in rural areas can exempt up to 160 acres. Oklahoma allows you to exempt up to $7,500 of equity in your vehicle.
Filing Bankruptcy When You Own The Car
A car loan is a secured debt, which means the car is collateral that can be taken back by the lender if you dont pay. When you file for Chapter 7 bankruptcy, you must list your assets on a form called Schedule A/B. Your car is an asset, because it has value. You must also file a statement of intention that that tells the court whether you plan to reaffirm your car loan, redeem the car or surrender it. If the statement of intention isnt filed within 30 days of when the bankruptcy is filed, the car loan is no longer part of the bankruptcy proceeding.
The first step to keeping your car if youre considering bankruptcy, is to determine its status. Youre either paying a loan, leasing or you own it free and clear. The status determines what you have to do to keep your car.
If youre making monthly payments on a car, its either a loan or a lease. If youre not sure which, check your agreement. If its a lease, you are renting the car and there are mileage limits that add costs when the lease ends and you return the car to the dealer.
If you are making monthly payments on a loan, the lender holds the title as collateral. Once youve paid for the car, you get the title and own it free and clear. If you cant make payments, the lender takes back the car back, which is repossession.
Being up to date on your car payments before you file for bankruptcy makes it much more likely youll keep your car when you file for either Chapter 7 or Chapter 13.
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Redeeming The Cars Current Replacement Value
There is a way to keep your car when you file for Chapter 7 bankruptcy even if its worth more than the exemption limit. You can pay the difference the remaining current replacement value to the lender, and own the car outright. This is called redeeming. Most people filing for bankruptcy, though, dont have the bundle of cash needed to do that. Fewer than 2% go this route.
Your Car In Chapter 13 Bankruptcy
Readers who filed for Chapter 13 bankruptcy were also very likely to keep their cars. If youre behind on your vehicle loan, you can use a Chapter 13 plan to catch up with your overdue payments , but you also have a couple of other options that dont apply to house loans. In Chapter 13, you might be able to stretch out the car payments over a longer period. Or, if the car loan is old enough, you might even be able to lower the balance on the principal and your interest rate.
I wish wed known that it would hurt us to sell a car before entering bankruptcy.
Sally, 48, Illinois
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Who Is Eligible For The Homestead Exemption And How Do You Claim It
Eligibility for the Florida homestead exemption is almost as generous as the exemption itself. To claim this unlimited-value exemption, youll need to be able to prove that this property if your familys primary residence. You will also be required to demonstrate the fact that you have owned this property for at least forty months.
It is important to note that filing for chapter 7 bankruptcy in Florida will not stop the bank from collecting on your home loan if it is past due. If you intend to file for chapter 7 bankruptcy in Florida, you will first need to ensure that you are current on your house payments. Otherwise, your property may not be eligible for this exemption and your property may be surrendered in the agreement.
Keeping Your Home In Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy, the court will liquidate most of your unsecured debts thats debt like credit card debt and personal loans, that isnt attached to an asset like a house or a car. Once that debt is out of the way, it should make it easier to make your mortgage payments.
If you cant pay your mortgage after bankruptcy, the result will be the same as not paying it before bankruptcy you eventually will lose your home.
If you know you are going to file for bankruptcy and want to keep your house, you can see if your mortgage lender would work with you on modifying your mortgage agreement in a way that would allow you to catch up on your payments. Do this before you file for bankruptcy. Once you file, the court takes over your assets and its out of your hands.
Here are some of the things that make it more likely your house will be protected if you file for Chapter 7 bankruptcy:
- You are up to date on mortgage payments
- All, or most, of your equity is protected with an exemption
- You owe more on the house than its worth
- You demonstrate to the court you can make your mortgage payments on time
- You negotiate with your lender before you file for bankruptcy on a loan modification.
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Bankruptcy Exemptions In Alberta:
- Enough food for you and your dependants for the next 12 months
- Clothing for you and/or your dependants up to $4,000
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $5,000
- Tools of your trade up to $10,000
- No limit on medical and dental aids
- Your principal residence up to $40,000 if you co-own your home, this amount will be reduced based on how much of the home you own
- Social allowance, handicap benefit or a widows pension as long as the proceeds from the payment are separate from your other funds
- RRSPs, RESPs and pensions
- Certain life insurance policies
Reaffirming The Car In Bankruptcy
Most motor vehicle creditors will require an individual to sign a Reaffirmation Agreement on the vehicle to be filed with the court. Signing this document essentially puts you in the same position with your obligation as before you filed. Reaffirming on a motor vehicle is also a useful tool to begin the process of rebuilding your credit. You can also choose to redeem the car by paying the lender the current market value in one payment.
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Downsides To Keeping Your House When Filing For Bankruptcy
You may desperately want to keep your house, even if youre so deep in debt youre considering filing bankruptcy. Thats understandable it not only has an emotional attachment, but could some day be an asset, even if youre behind on payments now.
That said, there are some financial downsides to hanging on to your house through a bankruptcy proceeding.
If you file for Chapter 13 bankruptcy, you have to continue making your monthly mortgage payments, as well as pay what you were behind on. This can be difficult, even if the payment plan that you, the court and your lenders agree to, seems to be doable.
Almost two-thirds of Chapter 13 bankruptcies fail. Its tough to keep to a payment plan over three to five years, even though modifications are allowed. Those involve going back to court and explaining why you need one. Through it all, you have to keep current on your mortgage payments, as well as all the other payments agreed to in the plan.
If you file for Chapter 7 and keep your house, you must make the monthly payments. The only hope for a modification, is the bank itself.
Bankruptcy, obviously, is complicated, and if youre worried about keeping your house, its even more so. If youre asking, Should I file for bankruptcy? your first move should be to talk to a credit counselor.
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How Long After Filing Will The Creditors Stop Calling
Once a creditor or bill collector becomes aware of the filing of a bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This notice may take a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.
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State Law Vs Federal Law
We live in a federal republic. There are 50 states with their own set of laws. Bankruptcy laws are federal. State and Federal laws determine different things. Bankruptcy laws determine whether or not you can break your promise to repay debt. State law determines who has the right to own property.
For example, state law determines whose name is on the title to your car. Bankruptcy law determines whether or not you have to pay your car note.
Can You Keep Your House Or Car After Filing For Bankruptcy
When good people fall on hard times and begin considering getting a fresh start through bankruptcy, perhaps the most feared potential losses are ones house and car. Transportation has become a necessity in terms of gainful employment and everyone needs a roof over their heads.
In Virginia, the law allows for a variety of bankruptcy exemptions and with the help of an experienced personal bankruptcy attorney, you may be able to keep your house and car. At the Law Office of Rebecca L. Evans, we work with everyday people just like you to help them get the fresh start they deserve. We wont judge you, criticize you or talk down to you we have your best interest in mind and work with the sole purpose of helping you make your life better.
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Your House In Chapter 7 Bankruptcy
If you file for Chapter 7 bankruptcythe kind that gets rid of debt most quicklyyou can keep your house under two conditions: Youre current with your mortgage payments when you file , and the laws in your state allow you to protect all of the equity you have in the property. By giving you relief from other kinds of debts, like credit card or medical bills, bankruptcy can free up money to help you keep up with your mortgage. Most of our readers had this experience: 68% of those who went through Chapter 7 bankruptcy were able to keep their home.
If youve already fallen behind on your mortgage payments when you file for Chapter 7 bankruptcy, youre likely to lose your house. Filing for bankruptcy lets you stay in your home another month or two, but ultimately, the bank will foreclose on the property. But if the foreclosure sale price is less than what you owe on the mortgage, your remaining mortgage debt can be discharged in bankruptcy. Our readers who lost their houses reported an average discharge of $130,000 in mortgage debt after filing Chapter 7.
Chapter 7 Vs Chapter 13 Bankruptcy
There are two types of bankruptcy for individuals: Chapter 7 bankruptcy and Chapter 13 bankruptcy:
- Chapter 7 Bankruptcy: Liquidation bankruptcy that wipes out the most unsecured debt as possible without the need to pay back through a repayment plan.
- Chapter 13 Bankruptcy: Also known as a wage earners plan. It allows the person with regular income to develop a strategy to repay all or part of their debts. Chapter 13 bankruptcy involves a repayment plan for over three to five years.
Chapter 7 bankruptcy allows you to keep your home if 1) you are current with your mortgage payments when you file for bankruptcy, and 2) your state laws approve of the bankruptcy exemption. There is a good chance youll lose your home if you are behind on mortgage payments.
Meanwhile, Chapter 13 bankruptcy may provide a grace period to catch up on mortgage payments if you are behind. If you can reach an agreement with the courts regarding a repayment plan, you may save the home.
Regarding your automobile, most chapter 7 cases allow you to keep the vehicle if you are current with payments. The same is true of chapter 13 situations, even if you are behind on loan payments. However, in both cases, expect a tighter leash from the lender and the potential to have to reaffirm the debt with a new agreement.
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