Keep Your Home and
Vehicle When You Declare Bankruptcy
While some individuals don’t want to retain their home or vehicle and are looking for a completely fresh start, others won’t file for bankruptcy if their house and car are at risk of being lost. These are very important questions that we will thoroughly discuss with you.
If you don’t wish to keep your home or vehicle because it is worth less than the amount owed on the mortgage, or you can’t afford it, we will carefully explain to you what to do to ensure the asset is returned to the mortgage holder. We may also take possession of the asset and subsequently release it to the secured creditor. Upon re-possession of the vehicle or home, it will be sold. Any loss incurred will be a claim in your bankruptcy.
Concerning vehicles:
- 1. Lenders will typically permit bankrupts to keep a vehicle if the bankrupt is current in his or her payments.
- 2. If the secured vehicle loan value is less than the value of the vehicle such that there is equity in the vehicle, the Licensed Insolvency Trustee (“LIT”) will permit the bankrupt to keep the vehicle provided the equity is equal to or less than the statutory vehicle exemption of $7,117.
- 3. If there is equity in a vehicle in excess of the statutory vehicle exemption of $7,117, this excess amount will have to be paid to the LIT as a condition of keeping the vehicle. If arrangements cannot be made, or are not possible, the LIT must take possession of the vehicle and sell it. Upon the sale, the LIT must remit the exemption amount of $7,117 to the bankrupt.
Don’t want to file bankruptcy for fear of losing your house and car? Your individual circumstances may allow you to keep these assets.