Deciding to file for bankruptcy is a difficult decision. With mounting debts, you may feel you have no other choice but to turn over your assets to creditors. Fortunately, there are options available for you to save your assets, including Chapter 13 bankruptcy. But, can I keep my luxury car, RV and boat in Chapter 13 bankruptcy?
What Is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a procedure in which a debtor proposes a repayment plan to their creditors, offering to pay off all, or part of, their debts from their future income. The settling of these debts usually occurs over a period of three-to-five years. If the individual sticks to the terms of the agreed upon repayment plan, the remaining debts will be discharged after the end of the termination date of the agreement. Chapter 13 bankruptcy is often used to prevent foreclosure, to make up missed payments on a mortgage or automobile, to pay back taxes, or to prevent an accrual of interest on local, state or federal taxes.
Qualifications for Chapter 13 Bankruptcy
To qualify for Chapter 13 bankruptcy, you must:
- Have a regular income.
- Your unsecured debt does not exceed $394,725, and any secured debt does not exceed $1,184,200.
- All tax filings are current and up to date.
- Have not filed for Chapter 13 in the previous two years.
- Have not filed for Chapter 7 in the last four years.
- Not have filed a bankruptcy petition – either Chapter 7 or 13 – in the previous 180 days which has been dismissed for various reasons, such as failing to appear in court or failing to comply with court orders.
Benefits of Chapter 13 Bankruptcy
Perhaps the best aspect of Chapter 13 bankruptcy is that you don’t have to lose your assets. In Chapter 7 bankruptcy, physical assets are considered nonexempt assets, meaning that the Trustee – the individual in charge of liquidating assets to pay unsecured debts – would take over these assets and sell them to settle what is owed.
In a Chapter 13 bankruptcy, on the other hand, a debtor must pass what is known as a “best interest test,” which simply means that you must pay your creditors what they would have been entitled to under a Chapter 7 bankruptcy. This means, that if you would have owed $
50,000 in a Chapter 7 bankruptcy, to settle a Chapter 13 bankruptcy you must repay the $50,000 over the period of the bankruptcy agreement (as noted above, between three-to-five years) to meet the terms of their best interest test. All the while, your house, your cars, and even your boat are safe and sound!
Some other benefits of a Chapter 13 bankruptcy include:
- An end to harassing phone calls.
- The chance to begin rebuilding your credit.
- And most importantly – the chance to get out from under a mountain of debt!
Contact a Bankruptcy Attorney Today
If you are finding yourself sinking in a sea of debt, but want to protect your hard-earned assets, you need to contact an experienced bankruptcy attorney right away. Call The Law Offices of Patrick L. Cordero for a free consultation today at (305) 445-4855.