There are a lot of myths
out there about how bankruptcy works, and one of the most prevalent is that you
can file a case and keep all of your stuff without making payments. But the
reality is that if you want to hang on to your house or car and file
bankruptcy, you will have to keep making your mortgage and auto loan payments.
There are a number of ways to go about maintaining payments on your
obligations, and in order to figure out what is best for you, you should talk
things over with a knowledgeable bankruptcy professional.
What you get to keep and
what you have to give back when you file bankruptcy depends on the type of case you file, and your
intentions. For example:
•
In a Chapter 13 case you are
allowed to make your mortgage car payments through the Chapter 13 Plan, but at
a lesser amount. A Chapter 13 allows you to pay the value of your vehicle
instead of the balance due. Under this type of bankruptcy, you do not sign a
reaffirmation agreement for the vehicle, you simply state the value of the car
and then pay that amount over the life of your bankruptcy case.
•
In a Chapter 7 if you want to
keep your car, you will probably have to file a reaffirmation agreement. A
reaffirmation agreement is a document setting forth the terms of repayment, and
acts like a new contract. The debt will remain due after the bankruptcy case is
over, so if you miss a payment you should expect a call from the lender.
•
As far as your house goes, if
you file a Chapter 13 case you are allowed to pay the past due amount over time
during your case. But in a Chapter 7 you might have to pay the total amount
past due all at once before the lender will let you keep your home.
There are other debts that have to be
serviced during bankruptcy also, such as a boat or motorcycle loan. You do have
the option to give back collateral to the lender during your case, and doing so
will relieve you of the financial obligation.
For more information about
bankruptcy cases and what property you get to keep if you file, call us today
or reach us online at www.law-ri.com.
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