Many people who choose to file Chapter 7 do so because they can no longer afford their debts. In Chapter 7, there are generally three options on how to keep property in bankruptcy. If the property has a loan/ lien securing the debt, a statement of intention as to those secured debts must be filed within 30 days of filing your bankruptcy. See bankruptcy law 11 U.S.C. § 521. It is highly recommended to consult with a bankruptcy attorney prior to completing you statement of intentions. Without competent advice you may accidentally limit the amount of relief bankruptcy can provide. For information on how to treat debt in a specific case contact a bankruptcy law firm in your area.
Reaffirm Debt in Bankruptcy
Generally, the first option for borrowers is to reaffirm the debt. Reaffirmation can be a successful tool used when trying to figure out how to keep property in bankruptcy. A reaffirmation essentially creates a new loan agreement between you and the lender. In reaffirmations, you pay the loan amount in full, at an agreed interest rate, within a certain amount of time. If a reaffirmation agreement is signed by all parties and approved by the bankruptcy judge it will be binding. Once a reaffirmation agreement is finalized, this debt will no longer be dischargeable because you are agreeing to pay the full amount.
If for some reason you stop making payments on a car loan after entering into a reaffirmation agreement, the lender not only can repossess your vehicle, but you also become personally liable for that remaining debt and the lender can obtain a judgment against you. So, make sure you truly want to keep that vehicle (or home) before entering into a reaffirmation agreement. You should consult with your bankruptcy attorney for advise on your specific situation.
How to Keep Property in Bankruptcy with Redemption
The second option borrowers can consider when evaluating how to keep property in bankruptcy is to redeem the property. This means that you, or someone on your behalf, who can pay the remainder of the loan in full, in cash, at that moment. If you have someone that can do that and you choose to redeem the property, then you will own it free and clear of any liens. However, careful consideration should be taken before redeeming property. Consult with a bankruptcy lawyer in Tampa to see if this option is right for you.
Surrender the Property in Bankruptcy
The third option is to surrender your property. If you surrender your home , you are walking away from it, handing it over to the trustee assigned to your case. Further, you are not allowed to defend a foreclosure action against your home after you receive discharge. See bankruptcy case Failla v. Citibank . When you choose to surrender real or personal property, you will no longer be personally liable for the debt connected to that piece of property. The surrender option exists to give you a “fresh start” and a creditor cannot later come after you for the amount discharged from your decision to surrender.
Additionally, property may be kept if it qualifies for an exemption. Exempt property is property that you do not have to forfeit when filing for bankruptcy and are instead entitled to keep. For more information on bankruptcy exemptions click here.
Bankruptcy Law Firm
If you are struggling with debt Florida law advisers may be able to help get a fresh start without having to lose your property. We are dedicated to providing effective representation, individualized attention, and affordable fees to our bankruptcy clients. All of our initial consultations are free and convenient payment plans are always available. Call us now at 800 990 7763 to speak with a Tampa bankruptcy lawyer.