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Married but separated filing chapter 7

Ontario, CA |
Attorney answers 3


People often ask if they can keep second homes, cars, boats, tax refunds, etc., when they are contemplating Bankruptcy. I always tell them they can keep what they want of they can pay for it, or if the equity or value is protected by an exemption in their State!

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). 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?

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.

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.

Good Luck!

Disclaimer: This answer does not constitute legal advice. I am admitted in the States of New York, New Jersey and Massachusetts only and make no attempt to opine on matters of law that are not relevant to those three States. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. Consult an attorney in your locale before you act on any of this advice. You should not rely on this advice alone and nothing in these communications creates an attorney client relationship. The opinions expressed herein are those of the author only and the fact that he has worked as an Assistant District Attorney; State Supreme Court Clerk; Special Assistant United States Attorney (Hawaii); Assistant Cornell University Counsel or Judge Advocate, United States Marine Corps should not be relied upon to assume that these statements reflect the policy of these organizations.



Find out the present value of the house and the car. Then find out how much you would have to pay to pay off the loans today. If there's no equity, you would not lose either. If there is equity, you must make sure there is an exemption if you want to file a chapter 7. Otherwise you will need to file a chapter 13 and pay back at least some money to your creditors over a 3 - 5 year plan.

Here's a secret: you can often find out the present value of your home from a free website called "" or another free website. Get the average retail value (NOT trade in value) from the website. Yes, this value is high. But, this is the value the bankruptcy trustees want.

Finally, this is just an informational answer to your question. I'm just trying to give you an idea of where you stand, You should NOT do a bankruptcy without an experienced attorney guiding you through the law and the procedure. This is especially true in your situation where the loss of assets is potentially at stake.

This answer is provided for informational purposes only. Actual legal advice can only be provided in an office consultation by an attorney licensed in your jurisdiction, with experience in the area of law in which your concern lies.


While I agree with the answers of my colleagues, I would like to add that if you are deficient on either a first or second mortgage, you can use a Chapter 13 repayment plan as a tool to pay the deficiency over the life of the plan.

Also, if the value of your home is less than the first mortgage, you can ask the court to "strip" or "eliminate" the second mortgage.

In deciding whether to file for bankruptcy, these are additional factors you should consider.

Disclaimer: The materials provided herein are for informational purposes and neither constitute legal advice nor should they be relied upon as legal advice. Every situation is fact sensitive, and it is impossible to evaluate a legal problem without a comprehensive consultation and a review of all facts and documents at issue. This answer does not create an attorney-client relationship. I am a California Bankruptcy lawyer. You should consult with an attorney to obtain advice specific to the particular facts of your case.