What type of bankruptcy should I file when I want to keep property?

There are two types of Bankruptcy for most individuals. Chapter 7 (liquidation) and Chapter 13 (payments are made to a Chapter 13 Trustee to be distributed pursuant to a Plan you and your attorney draft).


What is the test?

To determine of you get to keep the property you have to know two things... 1) What is the equity in the property? (I.e., what is it worth minus what you owe on it). 2) Will the exemption laws that are applied to the property protect the equity?


What does the Trustee look at?

Bankruptcy is much more concerned with equity than it is with debt. If you have no equity in a rental home the Trustee in a 7 or 13 does not have an interest in the property and you may keep it. If you owe more on the vacation home than it is worth you may be able to use Bankruptcy to reduce the amount of the debt, and again, keep it.



Exemptions are State Laws (or in some States Federal Law, or a choice between both) that tell you what amount of equity in a thing is protected and that you are allowed to keep. When you have equity in something that is not protected by an exemption then that is an issue that a lawyer must evaluate. See an attorney right away before you act.