How to File for Chapter 7 13 Bankruptcy & keep Property

How to file for Chapter 7 13 Bankruptcy in Louisville Kentucky and keep property

Most people that lose property filing for Chapter 7 or Chapter 13 Bankruptcy lose it because:
1 They didn’t make the monthly car or home payments or
2 The bank forgot to file the mortgage or car lien

It is very rare for someone to “lose” property to the court just because they file for bankruptcy. When you file for bankruptcy you review how the mortgage and car titles were recorded. In a Chapter 7 or Chapter 13 you are allowed to discharge all of your debts and start life over with a “reasonable amount of equity in property”. Each state can have a different amount of “reasonable property” that you are allowed to keep when you file for bankruptcy. Kentucky and most of the states use the Federal exemptions. A husband and wife have individual exemptions so the amount is doubled for a couple if they own property jointly. For instance, a couple with a 200,000 dollar home may have a 160,000 dollar mortgage and still keep their home in Kentucky for Chapter 7 or Chapter 13 bankruptcy. Each person has a 21,000 dollar exemption to keep their personal home under the Federal exemptions. Kentucky and the Federal exemptions have a 3250 exemption for autos. Indiana allows far less for property. Kentucky and the Federal exemptions constantly increase with the bi-annual cost of living raises. Indiana changes when they get around to modifying the state law. When your attorney reviews your Chapter 7 or 13 bankruptcy he will review how property is exempted and will inform you if there is a problem. The Federal and Kentucky retirement exemption is at least one million dollars see 522(n) if the account has an anti alienation clause it is probably not even property of the estate § 541(b)(5) .

Debtors can make the mistake of transferring property to a friend or relative prior to filing for less than a fair value. This can become a fraudulent or preferential transfer. The Trustee is allowed to undo a transfer in order to get such transfers back to pay creditors. The Debtor is not able to exempt property after he voluntarily transfers it fraudulently and loses it entirely.

Keeping a home in a Chapter 7 or Chapter 13 Bankruptcy is simple. You simply keep payments current and insured. The lender only wants the account up to date. The court only wants property if there is too much equity. A Chapter 13 will allow you up to 5 years to catch payments up. Sometimes you can refinance to a lower rate while you are in a Chapter 13. A Chapter 7 will not force the mortgage company to accept catching payments up over time and instead requires you to work something out, if you can. With some high rate mortgages or where you owe more than what a property is worth it may be best to surrender the property over time. A good strategy may be to defend the lawsuit and file bankruptcy cases at the right time to delay the foreclosure process as long as possible giving you a longer period of time to stay in the property with free rent. If the property has a second mortgage with no equity you may be able to destroy the second mortgage by stripping the second mortgage.

See How to file a Chapter 7 or Chapter 13 Bankruptcy in Louisville Kentucky.   Attorney Nick C. Thompson.