Understanding bankruptcy

Does declaring bankruptcy mean losing everything?

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A large reason many people fear bankruptcy is the misconception that bankruptcy means losing everything. However, bankruptcy may allow you to exempt certain assets, including your family home.

In Chapter 7 bankruptcy, homeowners might be able keep their home if their equity is below a certain amount. The mortgage payments actually become more manageable since the bankruptcy will be used to deal with other debts, such as credit cards and auto loans.

You may even be able to keep other assets as well. In fact, Chapter 7 bankruptcy allows for assets such as jewelry, tools of the trade, and even your car to be exempted. If you file Chapter 11 and Chapter 13 bankruptcy, you’ll typically need to come up with modified payment plans for assets such as your home or car.

In many cases people who declare bankruptcy don’t lose anything at all.

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