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What Possessions Can You Keep in Chapter 13?

Chapter 13 provides strong protections for possessions compared with other types of bankruptcy. In addition, many people file for Chapter 13 bankruptcy in order to stop home foreclosure or car repossession.

One of the advantages of filing Chapter 13 is that it may help you secure things like your home, cars, and boats for years to come. Of course, Chapter 13 can also allow filers to keep most of their other possessions while sorting out their debts.

How will the laws in your state apply to you and affect your property? Speak with a local bankruptcy lawyer about your options. Get a free case evaluation with a lawyer near you when you complete the form on this page.

What You May Be Able To Keep in Chapter 13

Again, Chapter 13 bankruptcy is designed to allow people to keep their valuable possessions while safely catching up on overdue debts. This includes debts tied to property or property with a lien against it.

When individuals file for Chapter 13, they create a restructured debt payment plan, often called a “wage earner’s plan,” on which they make monthly payments for a period of three to five years. During this time, you are typically protected from foreclosure and repossessions by the automatic stay. Then, once the plan is finished, debts may be discharged on anything included, which may include:

  • Homes
  • Cars
  • Boats
  • Motorcycles
  • RVs
  • Land
  • Almost all other property, even if it is tied to debts

If, at the end of the Chapter 13 process, a filer has caught up on his or her debt payments, then there is usually very little risk that the property attached to the debt will be lost.

What Are Reasons To File Chapter 13?

Now that you know that many people can keep their possessions during Chapter 13, you may also be curious what life events have led other people to file for bankruptcy.

Events that guide people towards bankruptcy range from the harrowing to the mundane, and often include:

  • Divorce
  • Temporary job loss
  • Drop in income
  • Emergency medical expenses
  • Inability to qualify for Chapter 7 bankruptcy

Remember, filing for Chapter 13 usually requires a relatively steady source of income in order to satisfy the monthly payment plan. If you have little income, you may instead consider filing for Chapter 7 bankruptcy, which also has provisions to protect your property.

In Chapter 7 bankruptcy, filers may discharge some or all of their unsecured debts, but the risk of property loss is higher than during Chapter 13. The Chapter 7 means test determines a person’s eligibility for this form of bankruptcy.

To learn more about whether bankruptcy is right for you, contact a local bankruptcy lawyer today.


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