Filing for bankruptcy is an important decision that people can make when they need to protect part of their lives from financial trouble. Bankruptcy filings have been on the rise in recent years due to a struggling economy, and high debt levels and unemployment among the American people. In 2009, over 30,000 people in Missouri and over 11,000 in Kansas filed for bankruptcy.
Keeping Your Car and Other Property During Bankruptcy
Safeguarding your property is one of the most important aspects of filing for bankruptcy. Many people opt for bankruptcy as a way to protect property like cars, houses, and other assets from being sold off to pay creditors. Determining what property may be kept is a difficult decision that depends on the type of bankruptcy filed, which state you file in, and other factors. An experienced Kansas City bankruptcy attorney can help you make the right decision.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is a liquidation bankruptcy that discharges your debts. Generally, any non-exempt property that can be sold will be sold to pay off your creditors. Certain property is exempt, however. In general, you can keep your house if your equity in the house is exempt (and each state has individual laws that are specific to each state) and you are able to continue making payments on it. It is important to remember that a Chapter 7 bankruptcy does not change the rights of a bank to foreclose on your home if you fail to make payments on it. In Missouri, equity in a property in which the debtor resides of up to $15,000 or a mobile home with a value up to $5,000 is exempt from being sold by the bankruptcy trustee.
Vehicles in Missouri are exempt up to $3,000, and there are also other exemptions that prevent certain property from being sold to pay off your creditors. For example, in Missouri up to $3,000 of value in the following is exempt: clothing, household goods, appliances, furnishings, books, animals, musical instruments and crops in Missouri.
Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is for people who are earning an income and generally able to make payments, but may have fallen behind due to some financial trouble. A plan is developed to pay all or a portion of your debts over the next three to five years.
Under a Chapter 13 bankruptcy, the debtor usually keeps all of his or her property provided that the debtor’s repayment plan meets certain guidelines and the debtor makes regular payments to his or her bankruptcy trustee. Chapter 13 bankruptcies are less common than Chapter 7 ones, however, and are usually reserved for people with a regular income.
An experienced Kansas City bankruptcy lawyer can help you make the right decision as to what bankruptcy you should file and what property you will be able to keep.