Jeffrey B. Irby
What Happens to My House Or Car If I File for Bankruptcy?
Declaring bankruptcy can be a tough decision to make. At this point, lots of questions are running through your mind. Will I lose my car or house in the process? Will the bankruptcy trustee take my property? I understand how difficult it can be to make a decision like this. If you're thinking of filing for bankruptcy, contact my law firm, Bankruptcy Solutions, in Huntsville, Alabama. I will provide suitable answers to all your questions and concerns about what to expect.
What to Expect When Filing for Bankruptcy
If you're thinking of filing for bankruptcy, you probably have a lot of questions about what to expect. However, what to expect depends on the type of bankruptcy you file for. In Alabama, you have the option of filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 is the most common form of bankruptcy. It offers you the opportunity to wipe out your unsecured debts and get a fresh start. Here, the trustee will collect all your property and assets and sell any of the assets that are not “exempt” (often, the exempt items you can keep include your car, home, furniture, clothing, household appliance, and related possessions). After selling your non-exempt assets, the trustee will pay you and the debtor.
Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy in Alabama involves setting up a payment plan to pay down your debt. Under Chapter 13, you can propose a repayment plan of 3–5 years to the creditor, with an offer to pay off part or all of the debts using your future income. The debt payments will be structured in the best possible way to pay down the debts. However, you must have a "regular source of income" to file Chapter 13.
Figuring out which chapter of bankruptcy to file for can be confusing without proper guidance. As an experienced bankruptcy attorney based in Huntsville, Alabama, I can review your case to help you determine whether you qualify for Chapter 7 or Chapter 13.
What Happens To My House If I File For Bankruptcy?
Your House in Chapter 7 Bankruptcy
If you file for Chapter 7 bankruptcy, you will be allowed to keep your house under two conditions:
- You are up-to-date with your mortgage payments.
- The house qualifies for assets that are "exempt" under Alabama bankruptcy law.
You are likely to lose your house if you have already fallen behind on your mortgage payments. However, you may be able to stay in your home for one or two months. To learn more about whether you can keep your house through the bankruptcy process, I urge you to contact Bankruptcy Solutions as soon as possible.
Your House in Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to set up a payment plan to pay down your debt. If you file for Chapter 13, you will not lose your home, even if you are behind on your mortgage payments. Rather, provided that you keep up with your payment plan, your home cannot be foreclosed by the lender.
What Happens To My Car If I File For Bankruptcy?
Your Car in Chapter 7 Bankruptcy
As with a house, you can keep your car after filing for Chapter 7 if:
- You are up-to-date with your car loan payments.
- The car qualifies as an “exempt” asset under Alabama state law.
After you file for bankruptcy, some lenders will allow you to continue making payments on your auto loan. In a few cases, you may need to "reaffirm" the car loan debt by agreeing to a new contract.
Your Car in Chapter 13 Bankruptcy
You are very likely to keep your car if you file for Chapter 13. With your established payment plan through Chapter 13, you can catch up with your overdue auto loan payments. Also, you can decide to stretch the auto loan payments over an extended period.
Why You Need a Bankruptcy Attorney
If you are considering bankruptcy, know that you’re far from alone. In 2018, Alabama had the highest bankruptcy filing rate in the nation. As of March 2019, the state had 529 bankruptcy filings per 100,000 residents. Those residents didn’t have to navigate the bankruptcy process alone, and neither do you. When you find yourself in financial distress, you need the help of a qualified bankruptcy attorney who you can trust. I will explain your options and give you the legal advice you need.
In addition, when you work with me on your bankruptcy, you will get free access to a comprehensive credit counseling course (valued at $1,000) called "7 Steps to a 720 Credit Score." The course will teach you quick and easy ways to drastically rebuild your credit score. With this, you can have a great credit score within one or two years.
Experienced Bankruptcy Attorney in Huntsville, Alabama
If you are facing financial hardship and considering filing for bankruptcy, contact my law firm, Bankruptcy Solutions, today. Using my trusted two-part approach, I will provide you with useful legal advice on how to discharge your debt and rebuild your credit score. My firm serves clients in Huntsville, Jackson County, and other areas in Northern Alabama.