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What Possessions Can you Keep in Chapter 13?

Chapter 13 bankruptcy is a type of personal bankruptcy that offers filers a period of three to five years in which they can catch up on past-due debts while staying current on other debts. Chapter 13 is also called "reorganization" because it allows filers to reorganize their debts while keeping many of their possessions.

So what possessions can you keep in Chapter 13? The answer depends on the specifics of a filer's case, but here’s a look at some general Chapter 13 guidelines.

  • A home: If you own your home outright or are current on mortgage payments, you'll likely be able to keep your home even when filing Chapter 13 bankruptcy. It is even possible to keep a home out of foreclosure in Chapter 13 bankruptcy. Past-due mortgage debt can be included in a Chapter 13 repayment plan to give filers a chance to catch up on that debt; however, for the duration of the Chapter 13 case, filers are required to make regular mortgage payments in addition to their back payments. The bankruptcy court lacks the authority to modify the terms of a mortgage loan.
  • A car: Chapter 13 also may make it possible for filers to keep their car. In some cases, filers are allowed to continue making payments only on their car’s fair market value if that amount is less than the remaining principal on their loan.
  • Family heirlooms: One reason some people may elect to file under Chapter 13 is the ability to keep non-essential possessions. As long as a filer can maintain payments according to the repayment plan, she does not have to surrender any property to be liquidated to repay creditors.
  • Other possessions: Depending on the specific circumstances surrounding a case, a filer may be able to keep any number of possessions. If you are wondering about specific possessions you don’t want to lose, you should consider consulting with a bankruptcy lawyer, who can give you a more accurate idea of what to expect from Chapter 13 bankruptcy.

Chapter 7 bankruptcy has much more restrictive rules about what possessions filers are permitted to keep. Each state outlines specific Chapter 7 exemptions that indicate which property filers may hold on to during a bankruptcy filing.

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