When you file bankruptcy you have to list all of your assets and all of your debts. However, there are numerous “exemption” categories and corresponding equity dollar limits related to each category where your can protect assets from creditors and the bankruptcy court trustee.
Exemptions may protect some or all of your property, depending on the assets, equity, available exemptions and chapter filed. A secured creditor’s lien and your obligations under a home or car loan require separate review. Sources: 11 U.S.C. § 522(b)–(c); U.S. Courts: Chapter 7 bankruptcy.
If you have a secured loan attached to an asset, the real question becomes “should you keep it or should you get rid of it and discharge the debt?” It really turns on what you want to do and what makes the most financial sense for you.
In a Chapter 7 case, your options for secured property may include surrender, redemption where available, or reaffirmation. These options have different requirements and consequences, and the rules for a home and a vehicle are not identical. Sources: U.S. Courts: Chapter 7 bankruptcy; 11 U.S.C. § 722. Your attorney can explain which choices apply before you make an election or sign an agreement.
A bankruptcy discharge can eliminate personal liability for a debt without eliminating a valid lien on the property securing it. A valid reaffirmation agreement can keep you personally liable for a debt that would otherwise be discharged. Continuing to make payments is not the same as reaffirming, and voluntary payments alone do not prevent discharge. Sources: 11 U.S.C. § 524(a), (c), (f); U.S. Courts: discharge in bankruptcy. Before deciding how to keep a home or car, review the loan, lien and available options with your bankruptcy attorney.
For background, see the U.S. Courts overview of the bankruptcy process and our bankruptcy consultation overview.
Over the past 34 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation.
We can review whether bankruptcy may help stop your garnishment and address your debts through a repayment plan. Sources: 11 U.S.C. § 362(a)–(d); U.S. Courts: Chapter 13 bankruptcy. If money has already been garnished, recovery may be possible in some cases, depending on the timing of the transfers, applicable exemptions and other legal requirements. A refund is not automatic or guaranteed. Sources: 11 U.S.C. § 547(b)–(c), (e)–(g); 11 U.S.C. § 522(g)–(i); 11 U.S.C. § 550(a).
But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
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