The myth most individuals conjure up about bankruptcy is that once a person files, he will lose all of his property and be left with nothing; however, bankruptcy in California does not quite work that way. California laws protect individuals who file for Chapter 7 and 13 and let them retain many of their items, including their homes and automobiles, so long as these items fall under the exemption category. Qualifications will vary, and the value of these objects will depend on the economy at the time, but your lawyer who you hire will inform you of all the exemptions. If you are afraid of losing your possessions, you may be unaware of the multiple exemptions and how they work in your favor to prevent you from losing what you love the most.

Property You May Keep

You have considered filing out the papers for bankruptcy and decided to hire a lawyer to mitigate your bankruptcy proceedings, but what most legal counselors will tell you is that most of your property can be saved. You may have bought a home and you may have $10,000 worth of equity in that home; your exemptions will apply to the equity, not toward the money you spent on your house. In addition, you may have gotten a car for $35,000 dollars, but today it may only be worth $12,000, and exemptions are applied to the worth of the object. Your exemptions will make your belongings safe from creditors, but that does not mean that exemptions cancel out the rights of creditors to take your vehicle or home if you’re behind on payments, and any lawyer, whether he’s a Los Angeles or Woodland Hills bankruptcy attorney, will tell you this.

As with Chapter 7, individuals who file for Chapter 13 can keep all their items so long as the plan that the courts have presented meets the requirements. The new redone plans still make it possible for a homeowner to make the mortgage payments, but under a new, minimized payment as compared to before. 

Home and Cars Under Chapter 13 

A likely scenario most individuals will find is that their home may not fully qualify for a full exemption under California law. If your home does not meet the exemption qualifications you can pay the non-exempt value to a creditor and still be able to keep your car or home. One snag to the non-exempt value is that if the item has security interests included in a contract, the creditor can still take your home, car or belonging and resell it. In addition to the security interests, a Los Angeles or Thousand Oaks bankruptcy attorney will tell you that it is in your best interest to wait on cashing in on inheritance money, life insurance policies, and property settlements, as creditors can seize this money as well.