Many debtors delay bankruptcy because they don’t want to give up one of their prized possessions. What these debtors fail to understand is that many assets, including a house or vehicle can be retained by the debtor even after they file bankruptcy. But there are some things you must understand.
When a debtor files bankruptcy he/she must file bankruptcy on all debt, no exceptions. The bankruptcy court must look at the value of the property and how much equity the debtor has in the property. For example, if a debtor owns a car worth $20,000 and owes $15,000 on it that means that the debtor has $5,000 of equity in the car.
When the debtor files bankruptcy Texas bankruptcy law provides extremely generous exemptions. For example, if a debtor owns a house and that house is his/her primary residence, the debtor can exempt all of the equity in the house regardless of the home’s value. However, other assets have a limit on how much equity can be exempted. A debtor can discuss with a bankruptcy attorney (pre-bankruptcy) how many assets can be exempted from seizure during bankruptcy so there are no surprises.
If a property’s equity exceeds the debtor’s exemption the bankruptcy court may consider liquidating it to repay creditors. However, this rarely happens as many bankruptcy cases are no-asset cases.
To find out more about how you can retain ownership of assets during bankruptcy, contact a Dallas bankruptcy attorney today.