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Do I have to give up everything I own if I file Chapter 7?

The simple answer to this question is no. In Chapter 7 bankruptcy, secured debts can be "reaffirmed", meaning a debtor will be allowed to continue paying on those accounts after bankruptcy. However, there are some requirements that must be met for a bankruptcy judge to allow the retention of certain assets. Let us explain.

In a Chapter 7 bankruptcy, a debtor may be allowed to keep essential assets such as a vehicle or house. However, they must be essential to the debtor's ability to live and/or work. In other words, they usually cannot be those which would be considered luxury items such as boats, campers, or recreational vehicles. Further, a debtor may not be allowed to retain a vacation home or other property than a primary residence. Most bankruptcy judges will allow a debtor to keep one working vehicle per individual in the household who is of driving age, and whom would need it for transportation to places such as school or work.

For a debt to be considered reaffirmed, both the creditor and the debtor must sign a Reaffirmation Agreement, and it must be filed with the bankruptcy court. This is a document stating the asset identification information, account balance and payment terms and conditions for the account post-bankruptcy. The decision to reaffirm a debt is completely at a creditor's discretion. They are not required to provide a Reaffirmation Agreement. If they so choose, they may decide not to reaffirm and can then repossess their collateral after the bankruptcy discharge is entered. However, if an account is current when an agreement is requested, creditors will, more often than not, agree to a reaffirmation.

Consulting with an experienced bankruptcy attorney can be very helpful by way of reviewing your current assets and offering a projection of which you would likely be allowed to keep.

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