People who are planning on filing for Chapter 7 bankruptcy usually question whether or not they can keep their homes and vehicles because these are their most valuable possessions. For most people, yes, they can keep their homes, vehicles, and almost all their property when they file for bankruptcy in South Carolina. However, to keep these items, certain conditions must be met.
You Can Keep Your Home and Car By Using Bankruptcy Exemptions
All states, including South Carolina, let people filing for bankruptcy keep some of their property by applying bankruptcy exemptions. You can claim a motor vehicle, homestead, or wildcard exemption to keep your car and home equity. On the other hand, if these exemptions are not enough to protect your equity, your property will be sold during bankruptcy. You will receive the exemption amount, and the remaining funds from the proceeds of the sale will be used to pay creditors.
You Must Not Be Behind on Your Home and Car Loans
If you have not finished paying for your car or house, you must be caught up on your car and mortgage payments when you file for Chapter 7. Financed cars and houses are secured debts, which means your lender can recover your car or house if you fail to make your payments on time, even if you end up filing for bankruptcy.
Your lender may let you keep your car or allow you to stay in your house for a month or so if you’re late on your payments. On the other hand, they may file a motion with the court to allow them to recover your house or car through repossession or foreclosure since auto and mortgage loans are secured debts. In such cases, courts typically side with lenders unless your bankruptcy trustee intends to sell the property and utilize nonexempt equity to pay off your creditors. Either way, you may lose your house or car to a trustee sale or your lender.
If you fail to keep your home or car, your mortgage or auto loan debt will be discharged or erased. This means you won’t need to pay the difference between the amount you received through the sale and your loan balance.
Can I Keep My Home and Car If I File for Chapter 13 Bankruptcy?
Yes. Filing for Chapter 13 is usually a better option for people who are behind on their car or mortgage payments but don’t have the money to keep up with them. You can file for Chapter 13 to keep up with overdue payments by stretching them out over a longer period. If the loan is older, you may even be allowed to reduce your interest rate or your principal balance.
Obtain Legal Guidance From a Seasoned South Carolina Chapter 7 Bankruptcy Attorney
Considering filing for Chapter 7 bankruptcy? Find out more about the process and how our South Carolina Chapter 7 bankruptcy attorney can assist you by contacting Reed Law Firm and scheduling your free case evaluation at 803-726-4888 or online.
