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Chapter 7 Bankruptcy: Homes and Cars

Some of the major concerns for those that are filing a Section 7 bankruptcy are what will happen to the automobile and the house. If you are filing a Chapter 7 bankruptcy case, whether you can keep your home depends on two things, the amount of the bankruptcy exemption for a primary residence that can be applied to your home and the amount value you have in your home.

The moment you file a Chapter 7 bankruptcy case, a bankruptcy estate is made. Nearly the majority of your benefits, including your home, get to be a piece of the insolvency domain. The court has the ability to manage all property of the home for your situation. This implies the Section 7 insolvency trustee is approved to liquidate your nonexempt resources and disseminate the returns to your banks.

However, the majority of Chapter 7 cases filed in Cumming Georgia (and the rest of the state) are known as “no-asset” cases; meaning that there are no assets to liquidate for the benefit of creditors because of Georgia’s bankruptcy exemption laws.  See O.C.G.A. § 44-13-100.

Home Equity and Mortgage(s)

The bankruptcy Chapter 7 trustee’s duty is to administer your bankruptcy case and sell any nonexempt property to pay toward your general unsecured loans. However, most Chapter 7 bankruptcy cases are considered “no asset” cases – in that there are no nonexempt assets for the trustee to sell.  Also, existing liens and mortgages on homes reduce the equity in real property for the trustee to be interested in.  Your home loan bank is generally a secured leaser with a lien (deed to secure debt) on your home. This lien is not wiped out by your Chapter 7 bankruptcy case and must be paid off first if your house is sold by the bankruptcy trustee in a liquidation. In the event that the expenses of selling your home loan surpass the equity in your home – then the Chapter 7 trustee will not make a claim on your home.

The Homestead Bankruptcy Exemption

In the event that your home has very significant equity (which is unusual in most consumer bankruptcy cases), the trustee has the ability to make a claim on your home for the benefit of your creditors. Fortunately, under Georgia and Federal bankruptcy law, the exemptions provided for single and married couples can protect the equity in a home in the majority of bankruptcy cases.  However, in Georgia and most other states, the bankruptcy exemptions for the equity in a home are primarily available for a person’s primary residence – and not second homes. In the event that you can completely or substantially exempt the equity in your home, the bankruptcy trustee will not be able to make a claim on your home.  In practice, most people that file a chapter 7 bankruptcy case will not lose any assets in the process including their home.

770-609-1247 | Chapter 7 Bankruptcy: Homes and Cars | Bankruptcy Lawyers Cumming Georgia

Keeping your Home

When you get a Section 7 bankruptcy discharge, your individual risk on the home loans is wiped out. This implies that the home loan bank can’t come after you on the off chance that you don’t pay your home loan(s). On the other hand, as was previously stated, the mortgage lender still has a lien on your home which does not get wiped out by your bankruptcy discharge. Accordingly, the mortgage lender, after your bankruptcy case is concluded or a relief of stay is granted, still has a right to take the house again through a foreclosure in the event that you don’t make your home mortgage payments. So in the event that you wish to keep your home, you should keep making your home loan installments before, during and after your Chapter 7 bankruptcy case.  Also, bankruptcy usually has no negative affect on your ability to modify a home mortgage.

Your Vehicle in a Bankruptcy

In the event that you have an automobile when you file a Chapter 7 bankruptcy, what you do with your automobile will rely on upon whether you owe money on it and whether you can afford to continue making the monthly payments on it. If you don’t owe cash on the automobile, the bankruptcy trustee may make a claim on your automobile if it has very substantial value. In the event that you do owe money on your car, you must demonstrate to the court whether you intend to reaffirm (keep) the automobile, recover the automobile or surrender the vehicle.  This “statement of intention” is an integral part of the bankruptcy petition for all consumer cases.

Automobile Loan Reaffirmation

In the event that you owe cash on your automobile, you can decide to reaffirm the debt obligation in a Chapter 7 bankruptcy case and keep the automobile. Reaffirmation in the context of a Chapter 7 bankruptcy means that you will sign an agreement with the lender re-obligating you to keep paying monthly payments for the automobile as a part of keeping the automobile. This reaffirmation agreement re-established the automobile loan for you as though your Chapter 7 bankruptcy case had never occurred.  As a part of a reaffirmation agreement, you must demonstrate to the court that you that the monthly payments on the automobile will not be an undue hardship and that you can afford to make the monthly payments.

Surrendering the Automobile in Bankruptcy

Also, as a part of a Chapter 7 bankruptcy case you can choose to not keep (surrender) the automobile.  This is most commonly done when the person filing the bankruptcy case decides that they do not need the automobile or that they cannot afford the monthly payments on it.  When you surrender an automobile in a Chapter 7 bankruptcy, the lender will usually work with you to take the car with little disruption – and as a part of your bankruptcy discharge, you will not be responsible for any deficiency or unpaid payments on the automobile.

Local Experienced Legal Help

If you facing insurmountable debt and need help understanding your bankruptcy options in Cumming Georgia and Forsyth County, call us today at 770-609-1247 to speak with one of our experienced Cumming Georgia bankruptcy lawyers.  Contact >

 

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