Will I Lose My Home and Car if I File Bankruptcy in California

Will I Lose My Home and Car if I File Bankruptcy in California?

Bankruptcy is a legal process through which people can address unmanageable debt. While bankruptcy can offer people a fresh financial start, many people are hesitant to file for bankruptcy because of concerns that they will lose their property, including their homes and cars. Depending on the type of bankruptcy that is filed, some of your property may be at risk. However, many types of property are exempt from the bankruptcy estate under state or federal law. Determining how much of your property might be at risk will depend on the bankruptcy chapter you file and the total value of those assets.

Will you lose your home under Chapter 7 bankruptcy?

Chapter 7 bankruptcy is the most common type of consumer bankruptcy. This type of bankruptcy is called liquidation bankruptcy because some of your assets may be seized and sold to repay a portion of your debts. Your remaining debt balances will be discharged after a few months, meaning that you will no longer be obligated to repay them.

Certain types of assets are exempt from bankruptcy under California's exemptions up to a specific value. The value of your property is its current fair market value rather than the amount that you paid for it. For a property like your home, you can also subtract your mortgage from the property's value and claim the exemption for the equity you have in your home. For example, if your home is worth $150,000 and you have $50,000 in equity in your home, you can claim the homestead exemption for the equity that you have and save your home. However, Chapter 7 bankruptcy will not extinguish your obligations to pay your mortgage since it is a secured debt. If you are behind on your mortgage payments, you could still lose your home through foreclosure. To qualify for Chapter 7 bankruptcy, you must pass the means test.

Will you lose your home under Chapter 13 bankruptcy?

Chapter 13 bankruptcy is the second-most common type of consumer bankruptcy. This type of bankruptcy works differently than Chapter 7 bankruptcy. When you file for bankruptcy under Chapter 13, you will propose a repayment plan of between three and five years. During the repayment period, you will pay your priority debts in full and small portions of your unsecured debts. If you complete your repayment plan, your remaining unsecured debt balances will be discharged.

Chapter 13 bankruptcy provides a way for you to save your home if you are in danger of foreclosure. The court issues an automatic stay when you file for Chapter 13 bankruptcy, which will freeze any foreclosure proceedings. You can use the repayment period to catch up on your missed mortgage payments while you continue to make your current payments. To qualify for Chapter 13, your total debt cannot exceed certain limits. You must also have a sufficient, regular income to make your payments under the plan.

Can you keep your personal property under Chapter 7 bankruptcy?

If you file for Chapter 7 bankruptcy in California, you will be able to keep the personal property up to the exempted amounts. If you want to keep your personal property that is worth more than the exemption amount, you can pay the bankruptcy court the difference between its value and the exemption amount. Remember that the value of your personal property is its fair market value rather than its replacement or purchase cost. Your personal property may be worth far less than what you initially paid for it.

You can also subtract any liens from the value of your property. For example, if you have a car that is worth $20,000 and still owe $19,000 on it, You can subtract the auto loan from the value to arrive at $1,000. You can use the state's exemption against that amount. Like the mortgage on your home, an auto loan is secured against your vehicle. This means that your obligation to continue making your auto loan payments will continue even after your unsecured debts are discharged. If you are behind on your car payments, the lender can repossess your vehicle to try to recoup its losses.

Many other types of personal property also fall under exemptions. When you file for Chapter 7 bankruptcy, you can keep your furnishings, appliances, clothing, and other similar items. Any personal property that you own that is not exempt or that exceeds the exemption amount may be seized by the trustee and sold to repay your creditors. However, you can pay the difference between the value of your personal property and the exempted amount if you want to keep it.

Most people who file for Chapter 7 bankruptcy can keep most of their property because of the exemptions. Even if you lose some of your property, Chapter 7 bankruptcy can be a good option if you are unable to afford your debts.

Will you lose your personal property if you file for Chapter 13 bankruptcy?

If you file for Chapter 13 bankruptcy, your assets will not be seized and sold. Instead, you will be restructuring your debts and repaying a portion of them over three to five years. Your remaining unsecured debt balances will be discharged after you complete your repayment plan successfully.

If you are behind on your car payments, you can use the repayment plan to catch up as long as you continue making your payments as agreed under your loan going forward. Under Chapter 13, you can keep all of your property.

Talk to an experienced bankruptcy lawyer at the Shulman Law Office

It is not an easy decision to file for bankruptcy. However, many people face unexpected circumstances and are unable to pay their debts. Bankruptcy can help you to get out from underneath the weight of overwhelming debt so that you can enjoy a fresh start. To learn more about bankruptcy and whether it is the right option for you, contact the Shulman Law Office in San Jose at 408-297-3333. We offer free, confidential consultations and can assist you with making the right decision for your situation.


questions to ask bankruptcy attorney

Questions to Ask Your San Jose Bankruptcy Attorney

questions to ask bankruptcy attorney

If you are overwhelmed by your financial circumstances and are unable to manage your debts, bankruptcy might be a good solution. Many people undergo circumstances beyond their control and need a fresh start. By filing for bankruptcy protection, you might have your unsecured debts discharged so that you can enjoy a new start. If you are thinking about bankruptcy and have scheduled a consultation with a bankruptcy firm, knowing the questions to ask can help to guide you in making your decision. Here are some questions that you should ask during your bankruptcy consultation.

1. Are you a lawyer?

While this question might at first seem silly, some law firms use support staff to handle consultations. These firms may have you meet with a legal assistant for your first meeting to try to secure your business. However, you will want to meet with an attorney during your first meeting so that you can receive the benefit of his or her legal analysis of your situation. Support staff cannot give you the type of analysis that you need.

2. Do I qualify for chapter 7?

Depending on your income, you may have to pass the means test to qualify for Chapter 7 bankruptcy. Your lawyer will analyze your income at your consultation to determine whether you are eligible to file for protection under Chapter 7. If your income is higher than the median income for the area, you might still pass the means test, depending on your debts and income. Your attorney will talk to you about your situation and help you to understand whether Chapter 7 bankruptcy is an option for you.

3. Do I have any non-exempt assets?

Certain types of assets are exempt in bankruptcy. This means that they cannot be taken from you and sold by the trustee to repay your creditors. While some states allow people to choose between the state and federal bankruptcy exemptions, people in California must use the state's exemptions. California allows people to choose between two sets of state exemptions under CCP § 703 or CCP § 704. Any exempt assets that you have will not be taken from you. Your attorney should be able to review your assets and tell you if you have any non-exempt assets.

4. What are my options for my non-exempt assets?

If you have assets that are non-exempt, your lawyer should give you information about the different strategies that you can take. For example, you might be able to keep the non-exempt asset by making an offer to the bankruptcy trustee.

5. Will my transfers in the past two years possibly be considered fraudulent?

To try to avoid bankruptcy, many people sell off some of their assets to get by. This will not raise any problems for you unless you sold assets for less than their fair market value or if you have not received the money for the assets before you file for bankruptcy. You should ask your lawyer to analyze any transfers that you have made during the last two years to determine if they might be problematic.

6. Have I made any preferential payments?

Preferential payments are payments that you might have made to a single creditor without paying others. For example, if you paid down a credit card balance with your tax refund while not paying other debts, it may be considered to be a preferential payment. The court may undo a preferential payment by suing the creditor that received the payment so that it can be divided between your creditors. If you paid off a family member, this could potentially be problematic. Your attorney should help you sort through these types of issues when you talk to him or her.

7. Have you handled any 707b objections, and what were the outcomes?

In some Chapter 7 cases, a 707b objection might be raised. This type of objection may be raised by the trustee to claim that the person should be in Chapter 13 bankruptcy because he or she allegedly makes too much money. Asking this question should give you an idea about the lawyer you are meeting with. Consider his or her reaction and whether he or she knows what a 707b objection is.

8. If the attorney recommends Chapter 13, what is the reason?

There are five main reasons why a Chapter 13 bankruptcy might be recommended, including the following:

If your lawyer recommends that you file for Chapter 13 bankruptcy, make sure to ask why. Attorneys typically charge higher fees for Chapter 13 bankruptcy cases but can include them in the Chapter 13 plan. Deciding to file for Chapter 13 bankruptcy should be based on a proper legal analysis rather than on the fees that can be charged.

9. If a Chapter 13 petition is recommended, what is the estimated monthly payment?

While it is not possible to give an exact figure for the plan payment in a Chapter 13 case, your attorney should be able to give you a range of values within which your payment will likely fall. If the lawyer cannot give you an estimate, he or she may not have much experience with Chapter 13 bankruptcy cases.

10. If Chapter 13 is recommended, how long will the repayment plan last?

Repayment plans in Chapter 13 bankruptcy cases can last from three to five years. If you qualify for a three-year plan, you will want to avoid getting locked into a five-year plan. Your attorney should give you an idea of the number of months you might expect to make payments based on your income and debts.

11. What are your fees, and how will you receive your payment?

Your attorney will want you to pay for your Chapter 7 bankruptcy fees in full before you can file. Legally, your attorney cannot collect fees after you file your Chapter 7 petition. If you will be filing a Chapter 13 petition, your attorney can include some of his or her fees in your repayment plan.

Talk to a bankruptcy lawyer at the Shulman Law Office

If you are struggling with your debts, you are not alone. Many people encounter difficult financial circumstances at some point in their lives. A bankruptcy lawyer at the Shulman Law Office understands the difficulties people sometimes face and can answer any questions that you might have. Contact us today to schedule a consultation by calling us at 408.297.3333.


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Is It Too Soon To Talk To A Bankruptcy Lawyer About My Debt Problems?

Is It Too Soon To Talk To A Bankruptcy Lawyer About My Debt Problems?

“Hi, this is Ike Shulman of Shulman Law Office. No, it’s never too soon to talk to a bankruptcy lawyer if you have debt problems. More importantly, don’t wait until it’s too late. A lawyer can help you go over your dischargeable debts, your non-exempt assets and any actions being taken or threatened to be taken by your creditors.Read more

san jose bankruptcy shulman law

The Automatic Stay: How It Protects You When You File Bankruptcy

By: Carron Armstrong

Calling a debtor after a bankruptcy is filed can be a violation of the automatic stay. One of the most powerful tools in your bankruptcy tool box is the automatic stay. The automatic stay is an injunction that goes into effect when the case is filed. Read more