Bankruptcy – Chapter 13 – Car, House & Personal Property
BANKRUPTCY: Car, House and Personal Property: Can I keep it?
Q: Can I keep my house?
A. YES. You may be able to keep your residence. That is a prime reason for filing a Chapter 13 bankruptcy case. However, you must be able to make your post-filing payments on a timely basis, and you must pay-off the past due payments as part of your Plan payments. Your current monthly house payment(s) will normally be made by you directly to the mortgage company(s). The Trustee will pay the past due amounts as part of the Plan payments.
Q: Can I keep my car?
A. YES. You may be able to keep your vehicle(s). However, you must be able to make your post-filing payments on a timely basis, and you must pay-off the past due payments as part of your Plan. You will normally be required to make your car loan payments as part of the payments made to the Trustee under your Plan.
Q: Can I reduce the amount I owe on my car or other property? (A “cramdown”).
A. YES in some cases. You may be able to reduce the amount of a debt secured to the current value of the property, and keep that property by paying that amount in the Chapter 13 Plan. This is frequently done on cars that are “upside-down”. There are limitations on being able to do this. For a motor vehicle, you generally must have owed the vehicle indebtedness for at least 2 ½ years. You can generally not cramdown a loan secured by your residence (Note: Exceptions exist: If your loan was part of a multi-unit purchase, if the loan includes an adjacent lot that is not part of your residential property, if the loan is for a mobile home that is not attached to the lot, or if the loan is secured by other non-residential property, then you may be able to reduce the amount of the loan to the value of the collateral. Ask your attorney about this.) See also: Lien Stripping of second mortgages.
Q. What is “lien stripping” of a second mortgage?
A. If have a second mortgage or third mortgage secured by your residence, and there is no longer any value supporting that security interest, then you may be able to have the Court declare that the security interest or lien no longer is attached to the property, and should be treated as an unsecured loan under your Plan. This situation may occur where the value of your home has fallen dramatically since you took out the second mortgage, and, now, the amount owed on the first mortgage is more than the current market value of the home. The lien can be removed from property upon your successful completion of the Plan, and the debt discharged as an unsecured debt at that time.
Q: Will I lose all of my property if I file a Chapter 13 Bankruptcy?
A. NO. One of the primary reasons to file a Chapter 13 case is to be able to keep valuable property that you own. The law allows the debtor to keep all of his/her property. You will have to pay the secured debt that is owed on the asset, but you can keep it if you
Contacting the Right Attorney: Bankruptcy can be a complicated matter. The responses to these Frequently Asked Questions are general in nature, and are not intended to provide legal advice for specific cases. A consultation with a Georgia bankruptcy attorney can provide you with the information you need to determine which option best addresses your circumstances. As a solo practitioner, I am able to give more time and personalized attention to my clients. I will personally communicate with creditors or banks to resolve your issues. Your case will never be handed down to a legal assistant or other staff member.
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