Bankruptcy Questions and Answers - Assets and Exemptions
Exactly what property is protected depends on the exemption scheme chosen. California has two schedules of exempt property.
All of the property you own at the time of the filing bankruptcy, and your right to receive property in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee may take control of this property and liquidate it to satisfy your creditors.
Certain property is exempt and you will be able to keep that property. California has two schedules of exempt property. The set of exemptions you should use depends on the nature and value of your property.
In many cases you can retain your home and automobile in a Chapter 7 bankruptcy proceeding. You will keep your home or automobile in a Chapter 7 if (1) you are current in making payments on a loan secured by the home or automobile; and (2) the home or automobile does not have equity (a liquidation value in excess of the amount owed to creditors with liens against the property) in excess of what you are allowed to exempt. In the event you want to keep your home or automobile, you must continue to make payments after your petition is filed and you may be required to reaffirm the secured debt.
If you are in arrears on your home home or automobile, you can consider filing a Chapter 13 petition, which allows you to develop a plan for repaying your creditors without necessarily liquidating assets.
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