Keeping Your Property in Chapter 13 Bankruptcy
Chapter 13 In Chapter 13 bankruptcy, you can keep both your exempt and non-exempt property because in a Chapter 13 bankruptcy case there is no asset liquidation. In Chapter 13, a repayment plan is proposed by the debtor where he/she proposes a plan to the US Trustee to make monthly payments (36-60 months) to pay creditors. The debtor makes the monthly payments to the Trustee who distributes the funds proportionally to creditors. As such, the debtor keeps his/her real and personal property and re-pays the value owed to your creditors through the three- to five-year repayment plan.
In Chapter 13 bankruptcy, even if you are behind in your mortgage or if the lender has started foreclosure proceedings, it is possible to keep your home. As the Debtor, you will propose a three to five year payment plan which includes payment of the past due mortgage and once a plan is approved, as long as you keep up with those payments, you will be able to keep your home. (Statistics reveal that approximately half of debtors are not able to make the payments for the entire time period, so it is important to be realistic about your ability to make your payments for the entire period of the bankruptcy.)
Similar to mortgage debt, you can “catch up” with any past due car payments with a repayment plan. It is even possible to extend the number of car payments or lower the balance of your principal and interest rate (if the vehicle is old enough).
Since you are repaying at least some (or all) of your debt in a Chapter 13 bankruptcy and keeping both your exempt and non-exempt property, you typically do not have to be concerned with the limit or number of exemptions. (This is all contingent on the trustee approving the repayment plan.)
Author - Linda Lindsey, Esq. Linda A. Lindsey is a life-long resident of the Inland Empire and she is the sole proprietor of Lindsey Law, APC. She is not only a licensed attorney in the State of California and the United States – Central District Court of California; she also holds an M.B.A. and has over 25 years of successful for-profit and non-profit business experience. She believes that all persons should have access to justice and even with a busy law practice she contributes her time and energy at local legal aid agencies. Ms. Lindsey provides legal representation in the areas of family law, bankruptcy and contracts. Lindsey Law is dedicated to providing its clients with quality legal representation from inception to conclusion.