The U.S. bankruptcy code offers several exemptions that generally allow you to keep some of your property. For example, furniture, clothes, personal belongings and professional tools may continue to remain in your possession.
As noted by WTOP News, if you have a paid-off car, you may keep it if it has no more than a few thousand dollars of equity value. Vehicles that still have an auto loan, however, may require you to reaffirm the loan.
What may I do to reaffirm a car loan?
By contacting your auto loan company, you may agree in writing that you will continue making payments after bankruptcy to avoid a vehicle repossession. This means that you could keep your car, but you may still face penalties if you miss a payment.
If a loss of income made it impossible for you to make your regular car payments, you may contact your lender to work out a new arrangement. This may enable you to refinance your vehicle with a more affordable payment plan.
How may I protect my homeownership?
Bankruptcy often allows a petitioner to keep his or her primary residence if it does not have a substantial amount of equity value. If you still have a mortgage on a house, you may not yet have enough equity in it to pay off your creditors.
When a house does have sufficient equity, you may need to file a Chapter 13 petition, which is a court-approved payment plan. This may enable you to enter into a financial arrangement with your creditors that could last up to five years. A Chapter 7 bankruptcy, however, may provide a full debt discharge and a fresh start for petitioners without significant assets.