Can I keep my home and car?

One of the principal concerns of debtors when filing for bankruptcy is keeping their home and car. To address any immediate fears:

• Filing bankruptcy stops foreclosure, buying you time to reorganize debt so you can afford your mortgage (though in order to save the property, you MUST file PRIOR to the foreclosure sale).

• If you have a wholly unsecured junior lien (2^{nd or} 3^{rd mortgage}, HELOC) against your home, you may be able to "strip" it by filing a motion to determine secured status. If successful, the junior lien will be treated as unsecured and wiped out upon completion of your Chapter 13 plan. This option is only available under Chapter 13 (for now). In order to strip a junior lien, your home must be indisputably worth less than the senior lien(s)(1^{st or 2nd} mortgage). This may require an appraisal, or at a minimum, a market analysis or broker's price opinion. Since the creditor can and will do their own valuation, there should be no dispute regarding actual value in order to successfully strip a junior lien.

• There are options for keeping your home and vehicle, even if you file for chapter 7 bankruptcy. If you are contractually current on your secured obligations, such as house or car, then you can still file for Chapter 7 and keep them (assuming your equity does not exceed the allowed exemption). If owe substantially more than your car is worth, you may be able to redeem the vehicle for fair market value. There is a company called 722 Redemption Funding which will finance the fair market value, or you can obtain your own financing. A redemption will allow you to pay what your car is worth, as opposed to what you owe.

• If you have owned your vehicle at least two and one half years and it is worth less than you owe on it, then a Chapter 13 will allow you to "cram" the amount you pay down to fair market value through the Chapter 13 plan.