When a bankruptcy petition is filed, an automatic stay is issued, preventing creditors from collecting debts. It will also prevent your mortgage lender from initiating a foreclosure and your auto loan creditor from repossessing your vehicle. During the bankruptcy procedure, you can rest assured that the majority of your property and assets will be safeguarded from creditors. This protection results from federal or state bankruptcy exemption statutes that specify how much of a debtor's property is exempt from liquidation.
Maintaining Your Home
For most individuals, their home is their most valuable asset. Losing your property to foreclosure can have far-reaching effects on your finances and credit score. If you are unable to make your mortgage payments due to financial difficulties, you may be able to retain your home under the federal bankruptcy exemption laws. During the bankruptcy procedure, a home with a value of up to $125,000 is exempt from foreclosure. Several jurisdictions permit the protection of homes with an unlimited value. Consult a qualified bankruptcy attorney for information on the state-provided exemptions.
Regardless of the exemption laws in your state, you will be able to retain your home and stop a foreclosure if you file Chapter 13. As long as you make payments according to a mortgage lender-approved payment plan, your home will be secure. Repaying your debts is the best method to keep your property and preserve your credit. Many lenders are lenient when it comes to homeowners negotiating repayment arrangements.
Maintaining Your Car
When attempting to prevent the repossession of your vehicle, there are several factors to consider. Attempt to contact your auto loan provider as soon as you fall behind on payments. This must be completed prior to filing for bankruptcy. Frequently, creditors are amenable to negotiating a loan modification that reduces your monthly payments. The lender loses a substantial amount of money through repossession, so they would prefer to modify the terms of your loan rather than risk losing even more money through repossession. However, time is of the essence when negotiating a loan modification with your lender; do not delay until it is too late.
Second, federal exemption laws permit the protection of a single vehicle valued up to $3,450. This may not seem like much, so examine the exemptions your state offers. Some states permit the protection of one vehicle with an unlimited value per household member.
Third, if your state's exemption provisions do not provide adequate protection for your vehicle, consider filing for Chapter 13 rather than Chapter 7 bankruptcy. You will be able to negotiate a debt repayment plan with your auto loan creditor under Chapter 13. This repayment plan will permit you to spread out your debt payments over a number of years. As long as you are making consistent payments under an approved repayment plan, you will be able to retain your car.""
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