Questions on Chapter 7 and 13 Bankruptcy

When you come into my office for your free consultation I can answer your questions and explain the entire bankruptcy process. This website offers an abundance of information, but just reading is not a substitute for knowing how the information affects your financial situation. Below are my answers to common questions regarding filing for a Bankruptcy in Utah.

I want to keep my home. Can I keep my home if I file Chapter 7 Bankruptcy?

Yes, if you are current with your mortgage payments and your real property taxes assessed against your home. If you are not current with those creditors, you will probably need to file under  Chapter 13 unless we can work out an agreement with them.  The good news is that most banks don't want your home back like they did years ago. Many of them are willing to work with you or even reduce interest or amount owed.

Will I lose my car if I file Chapter 7 Bankruptcy?

Not if you are current with your car payments and intend to continue making payments until the car note is paid in full. Whether or not you are current with your car payments, you may want to file  Chapter 13 in order to modify your car loan or to pay the arrearages and continue making future car payments.  Most cases you can keep your car depending on the net value. don't want to lose what I have.

Will I lose any of my Personal Property in Chapter 7?

No, with a few important exceptions. Finance companies including credit card lenders, sometimes have a security interest in various items of personal property. This should be listed on a schedule as collateral when the loan was disbursed. 

It is then you will be required to make payments on the loan or you could lose the items you have pledged (i.e., boat, some type of art collection, household goods, TV's, VCR's) personal property. Please keep in mind that the fair market value of most collateral is generally considerably less than the balance of the loan. If this is true you may want to consider filing. Learn more at http://bnkut.com

Chapter 13 in order to modify the loan amount and to lower monthly payments. One exception are money-purchase liens, i.e., liens on the purchase of personal property such as seller financing on TV's, stereo, furniture, and computers. You may either continue with your monthly payments on such items, return them, or file for a Chapter 13 to pay any arrearages or to modify the financing and lower the monthly payment.

Last Words

Chapter 13 may offer some benefits that Chapter 7 doesn't.  Also for some debtors, it may be beneficial to file a Chapter 13 and convert it to a Chapter 7 in order to safeguard certain personal property or real property. It is also a way to “strip” the second lien from your home if the first mortgage is upside down.   I always discuss this with my client, if this will affect them so that they can understand what option is best for them. 

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