Can I Keep My Car And Home When I File for Bankruptcy?
This is probably one of the most pressing and common questions I get from folks that call or come in to consult with our Myrtle Beach bankruptcy attorneys. Whether you know bankruptcy is in the looming future or is something more eminent, it is definitely a legitimate concern that you should have.
Bankruptcy comes with many negative stereotypes or misconceptions. One of the biggest misconceptions is that filing for bankruptcy will strip you of all your debts along with all of your assets as well.
This simply is not true.
Two things must occur to ensure that you can keep your car or your home. First, you have to understand exemptions in bankruptcy. Second, you have to be current on your payments as these are secured debts. Let’s take a look.
Bankruptcy law provides you with “exemptions” which is a threshold for property you can keep in a bankruptcy. There is a full list of South Carolina exemptions that your attorney can provide for you which shows exactly what assets you are able to keep in a bankruptcy and the exact dollar amount that each asset can be worth up to.
For an example, in South Carolina, the current exemption for one motor vehicle is $5,625.00 (for a single filer). This amount is referencing the equity in your vehicle. Say you have a vehicle that you still owe $10,000.00 to your finance company and the current Nada or Kelly blue book value on your car is $15,000.00. You have a total of $5,000.00 in equity for this particular vehicle. This vehicle is fully protected since the exemption for one vehicle is $5,625.00.
Now, let’s change the above hypothetical and say that you have paid off your vehicle. You owe the finance company $0.00 but your vehicle is worth $15,000.00 on the market. Your vehicle is not fully exempted at this point. Only $5,625.00 of your vehicle is protected and the remaining $9,375.00 is not. Please contact an attorney to discuss your options at this point when all of your assets are not protected.
Now that you have a better understanding of exemptions, let’s discuss the second aspect in determining whether you can keep your car or home in the bankruptcy.
Staying Current on Secured Debts:
Some of your creditors may have a security interest in your home, vehicle, or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
When you file for bankruptcy in South Carolina, your personal liability on the security interest is discharged. That means if you are unable to pay for the property (car, home, etc.) after bankruptcy and it is repossessed or foreclosed upon, the lender cannot sue or collect for any deficiency that may arise. This is especially handy when your home is worth less than the value of the mortgage.
If you want to retain your car or home, you must agree to keep making the current monthly payments on these secured debts until they are paid in full. If you fall behind, you will not be able to keep your car or home in a Chapter 7 Bankruptcy. If you ARE behind on your car or home, you do have the option of filing for a Chapter 13 Bankruptcy to save your property. Please consult with a Myrtle Beach bankruptcy attorney to discuss what a Chapter 13 entails.
If you have satisfied both the exemption threshold and you are current on your car or home, you certainly can keep these assets in the bankruptcy. For more information on the above topic, please contact our office for a free and no obligation initial consultation with an expert Myrtle Beach bankruptcy attorney.
Lam Law Firm, LLC •1335 44th Ave North • Suite 100 • Myrtle Beach, SC 29577
DISCLAIMER: The information contained on this page is for general information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.