You may have heard that filing for bankruptcy will likely result in losing your home, car or other valuable assets. However, the truth is that you may be able to keep many of your possessions after submitting a bankruptcy petition to an Illinois judge. Let’s take a look at the factors that generally determine what creditors are allowed to take after you file a Chapter 7 or 13 petition.
Do you have sufficient equity in a home or car?
State and federal Chapter 7 bankruptcy law may allow you to retain a portion of the equity that you have in a home or a car. You may also be allowed to retain the equity that has accrued in most assets that are used for business purposes. Typically, the trustee in your case won’t bother seizing any items that cost more to repossess than they would be worth on the open market.
You can generally keep assets in a Chapter 13 case
As long as you stay current on an auto or mortgage payment, you can generally keep your car or house throughout a Chapter 13 case. Assuming that you complete your repayment plan, the case will remain open for at least three years after you file for protection from creditors. If you have positive equity in an asset, it may be possible to sell the item and retain the cash from the sale.
If you are struggling to stay current with your creditors, it may be worthwhile to file for bankruptcy. In many cases, you may be able to keep assets while your case is pending. At a minimum, you’ll likely be able to keep any equity that you have accrued in those items prior to submitting a bankruptcy petition.