Wipe Out Credit Card Debt And Most Other Nonpriority Unsecured Debts
Bankruptcy is very good at wiping out unsecured , medical bills, overdue utility payments, personal loans, gym contracts. In fact, it can wipe out most nonpriority unsecured debts other than school loans.
The debt is unsecured if you didn’t promise to give back the purchased property if you didn’t pay the bill. By contrast, if you have a secured credit card, you’ll have to give the purchased item back. Jewelry, electronics, computers, furniture, and large appliances are often secured debts. You can find out by reading the receipt or credit contract.
Farming Fishing And Aquaculture Exemptions
- If your primary occupation is farming, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is fishing, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is aquaculture, personal property used by you to earn income are exempt up to $10,000
When Is Your Property Exempt
Will I lose my house if I file for bankruptcy, you ask? A bankruptcy trustee will not sell your property if its equity is less than or equal to the homestead exemption. The federal homestead bankruptcy exemption protects your house equity value of up to $25,150. The exemptions could be higher in some states. Lets take a look at the three most populous states in the country:
California has two systems to use in the homestead exemption. In System 1, the exemptions are as follow:
- $75,000 for single homeowners
- $100,000 if you live with family members
- $175,000 if youre senior or with disability
- $175,000 if youre aged 55 above, single and with low income
;In System 2, the exemption is up to $29,275. As to which system will be more applicable to you depends on what you want to protect.
;Texas is more generous, with unlimited homestead exemption for the following conditions:
- 10 acres of residence in a city, town, or village
- Up to 100 acres in the country
- Up to 200 acres for families
;You can choose to liquidate your house, and the proceeds will be exempt for the next six months.
;Another generous homestead exemption is in Florida. If your home is not more than half an acre in a municipality or within 160 acres in other areas, and you own it for at least 1,215 days, you have an unlimited exemption. Otherwise, youre limited to the federal homestead exemption. If you file under Chapter 13, youll pay the nonexempt equity amount in your repayment plan.
Bankruptcy Exemptions Help You Keep Your House Automobile Pension And Retirement Funds Personal Belongings And More
By Cara O’Neill, Attorney
You’re concerned that you could lose property in bankruptcyand you’re right. But you can eliminate surprises with careful planning. Start by learning how exemption laws protect assets in bankruptcy. Here are the basics:
- Your state decides which property you can save.
- You’ll lose unprotected property in Chapter 7 and pay to keep it in Chapter 13.
- Timing rules tell you the state’s exemption laws you’ll use.
You’ll find more details below. To check for common issues in your bankruptcy case, try the ten-question bankruptcy quizit flags areas you’ll want to look into further.
What Controls Keeping My Home After 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.
There are three factors that determine whether you can keep your home in bankruptcy proceedings:
- The Chapter of bankruptcy you file
- How much equity you have paid into your mortgage
- If you can afford your monthly mortgage payments while facing debt
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Keeping The Car Outside Of Bankruptcy
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act eliminated drive through car loan agreements for bankruptcies. Before the act, consumers and car lenders could continue with whatever agreement they wanted, ignoring the bankruptcy. While drive-throughs are now against bankruptcy rules, it still happens and courts rarely enforce it. When no intention to reaffirm, redeem or surrender the car is filed by the deadline, a car loan is dropped from the bankruptcy. In many cases, the car owner and lender continue to do business and always, and courts rarely enforce it. Of course, this only works for the car owner if theyre making payments on time.
Since this option is counter to bankruptcy law, its not necessarily something youd want to pursue, and it provides a lot less protection than going with one of the routes allowed by law.
What Happens When I File A Chapter 13 Case
In a Chapter 13 case, you do not have to liquidate assets in order to pay your creditors; instead, you develop a plan to repay all or a portion of your debts over time, which allows you to keep most or all of your property. During the period the plan is in effect, you make your regular payments to the trustee assigned to your case who, in turn, distributes the money to your creditors. The applicable commitment period for payment under a Chapter 13 plan is three years for debtors whose family’s current monthly income is less than the state median for a family of the same size and five years if it is greater. Your Chapter 13 plan must pay your unsecured creditors at least as much as they would receive if your nonexempt assets were liquidated under Chapter 7. Also, your plan payments for unsecured debts must be equal to your disposable income . In other words, you cannot retain a cash reserve each month.
In order to be eligible to file for Chapter 13 bankruptcy, you must have regular income and meet certain debt limitations for your unsecured and secured debts . Individuals, sole proprietorship businesses, or spouses can file a Chapter 13 Bankruptcy. Just like a Chapter 7 case, filing a petition for Chapter 13 bankruptcy with the bankruptcy court automatically stays most debt collection actions against you. You must file your repayment plan either with your petition or within 14 days after filing your case.
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What Happens To Your Car In Chapter 7 Bankruptcy
Filing for Chapter 7 bankruptcy can clear some unsecured debts, but it may also require selling or giving up some assets to pay debts. The items that are exempt from liquidation, and the value that can be exempted, varies by state.
If you file for Chapter 7 bankruptcy and local bankruptcy laws allow you to exempt all of the equity you have in your car, you can keep the vehicleas long as you’re current on your loan payments. And if the market value of a vehicle you own outright is less than the exemption amount, you’re in the clear.
To determine how much equity you have in the vehicle, subtract your current loan balance from the car’s value. Because vehicles tend to depreciate in value fairly quickly, you may not have much equity unless you’re nearing the end of your loan term.
Once you’ve determined how much equity you have in your vehicle, take a look at what the motor vehicle exemption is in your state. If you have less equity than the exemption limit, the car is protected. For example, if your state’s exemption limit is $4,000 and you have $3,500 in equity in your vehicle, you can keep it.
If the equity in your car exceeds the exemption limit, a few different things can happen.
Your Car & House In Bankruptcy
With respect to your primary vehicle and primary home , you can generally retain the property if you meet one of the following conditions. Keep in mind that just because you are able to retain property does not mean you are free from satisfying your obligation to repay remaining amounts owed.
1) You Lack Equity; That is, you owe more on your auto or mortgage loan than your car or home is worth.
2) Youre Filing Chapter 13; You must be current on your auto or mortgage loan in order to keep your car or home. If you’ve fallen behind on payments, Chapter 13 will allow you to make up missed payments over the three- to five-year repayment period. You cannot do so in Chapter 7.
3) Youre Filing Chapter 7 and Meet ALL;of the Following Conditions:
To illustrate how auto and homestead exemptions apply in a Chapter 7 case, consider the following examples. The matrix below also summarizes the steps involved in determining whether you can keep or must surrender your car or house.
Lets say you own a car worth $6,000 and owe $5,000 on your auto loan. Subtract your debt from the cars replacement value , and the difference is your equity .
If your states auto exemption is, say, $1,500, you can exempt all of your equity. As long as you continue to make timely auto payments, you can keep the vehicle.
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Q1 How Does The Trustee Decide To Sell My House
The trustee may or may not sell your home depending on its equity value. If its less than the exemption amount, then the trustee must not sell your house. If you have significant equity left, the trustee will sell it.;
The goal of selling your property is to get funds that can be used to pay off your unsecured debts. If your home gets sold, the trustee must give you first the exemption amount before paying your debts to the creditors.
What Doesnt Bankruptcy Do
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of secured creditors. A secured creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt
- Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes.
- Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan. Discharge debts that arise after bankruptcy has been filed.
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Will I Lose My House
Whether or not you will lose your house depends on the value of your house, and the amount owing on your mortgage. Most people that declare bankruptcy in Ontario and own a house will have a mortgage on the house.
The Ontario Execution Act stipulates that your principal residence is exempt from seizure IF the equity in your home does not exceed $10,783. ;If the equity does exceed $10,783 then your principal residence is subject to seizure and sale.
In that case you are required to pay the equity in your house if you go bankrupt. . For more information read our FAQ What Happens To My House In A Bankruptcy?
How Can Bankruptcy Help Protect My Home In Pa
Fortunately, you can often protect your home by filing for bankruptcy. There is a common idea that bankruptcy is some sort of trap or that bankruptcy will take everything from you. However, nothing could be farther from the truth.
The very goal of the Bankruptcy Code is to assist debtors in restructuring and managing excess debt in order to avoid financial catastrophe and help creditors get paid. Over the years, bankruptcy has made economic recovery possible for millions of Americans.
Furthermore, the bankruptcy process has allowed many people to protect their homes against foreclosure actions from their creditors. You may wonder how you can protect your property from foreclosure by filing for bankruptcy in Pennsylvania. Fortunately, bankruptcy laws contain a series of protections to help debtors pay back what they owe.
As soon as you file for bankruptcy, you obtain the protections provided by an automatic stay. An automatic stay is a legal mechanism that prevents your creditors from engaging in debt collection actions or foreclosure while your bankruptcy case is underway. The effect of this protection is immediate, and your creditors will not be allowed to take your home away from you starting the moment the stay is activated.
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Can I Keep My House If I File For Bankruptcy In Pennsylvania
Your house is usually one of the most important places for you. You may have fought long and hard to get it, and you may not want to give up the everlasting memories you forged there. However, all of these great things may be in jeopardy when your creditors try to take it away from you. Unfortunately, you could lose your home to your creditors if you build up excess debt. However, there are ways to protect your home from your creditors during bankruptcy proceedings. Young Marr & AssociatesPennsylvania bankruptcy lawyers invite you to keep reading as we discuss whether you can keep your house if you file for bankruptcy in Pennsylvania.
What Bankruptcy Can Do
Bankruptcy allows people struggling with debt to wipe out certain obligations and get a fresh start. The two primary bankruptcy types filedChapter 7 and Chapter 13 bankruptcyeach offer different benefits and, in some cases, treat debt and property differently, too. You’ll choose the chapter that’s right for you depending on your income, property, and goals.
Here are some of the things you can expect regardless of whether you file for Chapter 7 or 13.
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Consider The Equity You Have In Your House
Don’t worry, Chapter 7 filers, there are still ways you can keep your house. When deciding whether your house is exempt under Chapter 7, the trustee only considers the equity in your house.
Equity is the market value of your house minus the balance on your mortgages or home equity loans. Many bankruptcy filers have little or negative equity in their houses, so their houses are exempt and need not be sold in the bankruptcy process.
However, if you have equity in your home over the exemption limit, you may be forced to sell your house to pay your debt or “buy it back” by paying the trustee the value of your house.
What Are Chapter 7 Bankruptcy Exemptions
The purpose of bankruptcy is to help people get back on their feet and regain control of their financial situation. In order to help with this process, the government created a set of exemptions to help individuals maintain their quality of life, while still resolving their issues with creditors.
Can You Keep Your Car If You File For Bankruptcy
Most provincial regulations include an exemption for some or all of the value of your car, especially if it is needed for your occupation. If you are making payments on your car, retaining the car will depend partly on whether you can continue the payments. A Licensed Insolvency Trustee can explain how the regulations will apply to your specific situation.
Provincial exemptions for homes and cars can be confusing, especially when considering mortgages and leases. A Licensed Insolvency Trustee will gladly help you learn how these assets would be affected in a bankruptcy. Your conversation is confidential and you are under no obligation. Contact a Trustee today!
Bankruptcy Exemptions by Province and Territory
- ;;; The exemption lists we provide below are simplified summaries of the law
- ;;; Even where there is no dollar limit, exemptions are limited to what you and your dependants really need
- ;;; The provinces often adjust the exemptions for various reasons, such as inflation
For interpretation of the rules in your case, we strongly recommend that you contact a Licensed Insolvency Trustee to review your situation and determine which of your assets will be exempt if you file for bankruptcy. You should be completely clear on what you can keep if you go bankrupt in Canada, versus what you may lose.
Please choose your province or territory:
Do I Lose All My Assets When I File For Bankruptcy
Contrary to popular belief, when you file for bankruptcy, you will not lose everything. Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain. There are also certain costs and processes that apply across the country. Lets take a look at them below.
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The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records; failed to explain satisfactorily any loss of assets; committed a bankruptcy crime such as perjury; failed to obey a lawful order of the bankruptcy court; fraudulently transferred, concealed, or destroyed property that would have become property of the estate; or failed to complete an approved instructional course concerning financial management. 11 U.S.C. §;727; Fed. R. Bankr. P. 4005.