Repossession and Foreclosure Under Bankruptcy Laws


If you are facing foreclosure of your home or repossession of your car, you might have to file bankruptcy in order not to lose them. Even then, the outcome can be questionable as to whether you get to keep your car or your home.

The first consideration of whether you can keep your car or home under bankruptcy is the type of bankruptcy you file. You may have a better chance of salvaging your home or your vehicle if you file a Chapter 13 bankruptcy as compared to a Chapter 7 bankruptcy.

The second thing to be considered, as to whether you may lose your car or home in bankruptcy, is where you live. Different states have different rules for bankruptcy. In Florida, for instance, your home cannot be touched under bankruptcy protection. In Pennsylvania, however, you could lose your home under Chapter 7 or Chapter 13, depending on meeting certain requirements. There is no comprehensive federal law for bankruptcy.

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Filing bankruptcy will immediately halt any foreclosure or repossession actions until a final determination is reached. So, if you have an immediate foreclosure or repossession pending, you might want to file bankruptcy as a tactic to give you more time to work out some other resolution.

In any event, under foreclosure or repossession threats, the best bankruptcy to file is a Chapter 13. The reason for this is that a Chapter 13 bankruptcy allows you to repay secured debts over a designated amount of time. Your creditors basically agree to an installment plan that allows you to hold on to your secured possessions like your car and your home. During this period of time, your creditors cannot continue collection actions against you or begin new ones.

The Chapter 13 bankruptcy is often referred to as the wage earner's bankruptcy, because it literally allows you to work out of your debt. By contrast, a Chapter 7 bankruptcy calls for a trustee to take possession of your assets, liquidate them, and use the proceeds to pay off your creditors. Sometimes you can face the liquidation of your automobile and your home under such proceedings. Sometimes you can retain possession of your home and car under Chapter 7 depending upon your state's regulations and requirements.

Because it is so difficult to pin down exactly what might happen under either bankruptcy scenario, you should seek out the advice of an experienced bankruptcy lawyer in your locality. These attorneys have an intimate knowledge of your state's bankruptcy laws and can easily help you determine which bankruptcy plan is best suited for your particular situation.


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