The term exempt property does not exist in a Chapter 13 filing but all property is protected during a Chapter 13 bankruptcy. Since payments are restructured, as long as remaining payments are made the property will be safe and will remain in the possession of the bankruptcy filer.
To make property exempt, the bankruptcy filer must make sure to claim the desired items as exempt in the filing forms and properly identify each item and its value. There are limits to exemptions and allowable exemptions are specific to item types that can be considered day to day necessities such as clothing, transportation, housing, trade tools, pension, earnings, and household items.
An exempt item is one that cannot be repossessed or sold to repay a bankruptcy filers debts during a liquidation. Exempt items will remain in the possession of the filer during and following a bankruptcy.
Although Chapter 13’s cannot protect all of an individual’s property from collection, in general, individuals who file Chapter 13 bankruptcies are able to keep the majority if not all of their possessions.
If all debts on the car are discharged during bankruptcy the car will become the sole property of the bankruptcy filer following discharge. If debts remain following bankruptcy, the debtor can keep the car following bankruptcy but will have to make full repayment of the car loan.
If a bankruptcy is filed there is an automatic halt placed on all collection efforts by creditors. A repossession can be prevented by the filing of a bankruptcy application.
In a Chapter 7 bankruptcy filed in Colorado, each individual is allowed to claim up to $5000 automobiles as exempt, if a couple files jointly, they have a $10,000 car exemption. This exemption takes into account the equity in the car, the difference between its value and the amount of debt still owed on the car and is not based on its original cost.
Although most types of bankruptcy allow an individual the chance to hold onto at least one car, Chapter 13 bankruptcies are most commonly thought of as the bankruptcy option best suited to protecting property. A Chapter 13 Bankruptcy is a credit payment plan and does not commonly involve the sale of possessions so Chapter 13 bankruptcies often offer individuals the best chance to hold on to their vehicles.
If you wish to retain more than one home you must make sure you can reasonably pay the mortgages on all of the homes they own. In the case of multiple houses being keep the only option available to a debtor is usually a Chapter 13 bankruptcy.
The best way to protect your home if its equity is above $60,000 is to file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy can stop pending foreclosures and allows a debtor to restructure their late fees and past due mortgage payments.
Filing a Chapter 13 bankruptcy will stop the foreclosure process and delinquent and back mortgage payments can be paid within a chapter 13 repayment plan, allowing the debtor to prevent foreclosure from looming following the discharge of all dischargeable debts.