One worry that many people have upon declaring bankruptcy is in regards to their property. With many debt collection agencies making false threats about possessing a debtor’s home or car, borrowers are unsurprisingly scared about what it might mean to declare bankruptcy. The good news for them is that bankruptcy exists in part to allow debtors to hold on to their possessions. There are a number of types of bankruptcy, some of which enable debtors to keep all of their assets. The important thing is to declare bankruptcy before you begin selling off your most valuable possessions to pay your debts.
Protecting Property
In Chapter 13 bankruptcy, a debtor is allowed to keep control of all his or her possessions, on the condition that all debts are paid eventually. The court will then work with the debtor and the lenders to come up with a new payment plan. The borrower’s income will be evaluated, and all non-essential income must go towards paying off the debts. The debts will be scheduled to be paid by a later date, and some of the debts may even be settled for lesser amounts to ensure that the lenders at least get some of their money back should any further misfortune arise. Throughout this time, all possessions that the debtor owns remain under his or her control.
Chapter 7 is the other most common type of bankruptcy in which a debtor gets to keep much of his or her essential property. Each state has their own exemption laws, but typically only nonessential items like a boat or a vacation home are seized by the court to pay off as much debt as possible, but all remaining debt is discharged. In either case, Indiana bankruptcy will allow you to keep some of your property.
