Your Home, Your Car and Bankruptcy - Westgate Law

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Your Home, Your Car and Bankruptcy

Many of us are attached to our vehicles and some of us aren’t sure what we would do without them. When considering filing for bankruptcy, there tends to be a lot of discussion about the home, but what about the car? What happens to your car when you file for bankruptcy?


The good news is that in most bankruptcy cases the filer not only gets to keep their home, but their car as well (as long as the equity in the property is fully exempt). In Chapter 13 bankruptcy cases where property is not fully exempt, you can still keep the property by paying the non-exempt value to creditors.


In some instances creditors may have a “security interest” in your home or vehicle (or other personal property). Bankruptcy will not negate the consequences in this situation. (Security interest means that you offered up an item as collateral for a debt). Filers in this situation will find that non-payment of this type of debt can lead to the creditor taking the property offered as “security” before, during or after a bankruptcy discharge.


Chapter 13 filers will find that there is a possibility they can retain secured property simply by paying the value of the property (in comparison to the full amount of the debt owed). Chapter 13 can also be used to catch up on the payments on a secured loan in order to prevent the creditor from taking the personal property at risk.


Chapter 7 filers also have several options for keeping property offered as “security” or collateral after filing. First, you can come to an agreement with the creditor to keep making payments on the secured debt until it is paid in full. Second, you can pay the creditor who holds the security interest the amount of the property you originally offered as collateral. Third, (only in cases where the creditor utilized improper conduct or fraudulent measures), you could challenge the debt. In cases where you put household goods up as collateral for a loan, (excepting a loan to purchase said household goods) you can typically keep your property without additional payments post-bankruptcy.


If you have questions regarding secure loans and the affect that bankruptcy will have on your personal property, please get in touch with your expert Southern California bankruptcy lawyers at Westgate Law today.

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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