CAN I KEEP MY PROPERTY?

Whether or not you lose any of your property depends on first, the type of bankruptcy relief you select; either "straight bankruptcy," referred to as Chapter 7, or a Chapter 13 debt reorganization. Second, it depends on the amount and nature of the things you own. Generally, most people filing even straight bankruptcy keep most and often all of their property.

Certain property is called "exempt" (that means protected) assets. You are allowed to keep those items that are exempt. The idea is that you need certain basic items in order to make a successful fresh start after bankruptcy.

Exempt property is defined by law. In California, there are two lists of exempt property. Your attorney would carefully review both lists to choose which one would best protect your assets. You can choose either list, but not both.

Sometimes, if you have an item that is not projectable, legal pre-bankruptcy planning may be able to convert the value of the item into a form that is projectable. A competent bankruptcy attorney will be able to explain to you if this is needed and possible in your specific circumstances.

As the lists vary, it is important to inventory all of your assets to determine what would be exempt. It is probable that all of your property will be exempt and you will lose nothing but the debts after filing bankruptcy.

Some things you own may be secured. That means the creditor has a lien on the item. Common secured items are homes with mortgages, automobiles, furniture and jewelry being purchased on payments, to name a few. If you want to keep a secured item, you will most likely have to keep the debt that goes with it. Another option is redeeming the item; that is, buy it back for cash for its' present value, even if that is less than you owe. It is your choice on secured debts whether you keep or give up the item.

If you file Chapter 13, you normally keep all of your assets because you are, in fact, paying your debts, just over an extended period of time with reduced interest or no interest at all.

Whether you file straight bankruptcy or a reorganization under Chapter 13, you will probably keep all of your property.