“Can I still keep my…?” is a common question among those considering bankruptcy. The property is usually a house or a car, but other property types are occasionally mentioned. Although Chapter 13 bankruptcy can help you avoid foreclosure, it’s always best to hire the help of a bankruptcy attorney in Victorville, CA, before making a decision.
Many people concerned about losing property in bankruptcy don’t realize that surrendering property in bankruptcy is an option—and it can be an effective means of getting out from under massive debt and starting over.
Property Surrender in a Chapter 7 Bankruptcy
In a consumer bankruptcy case, the debtor must file a statement of intent for any property used as collateral for a debt. In this statement, the debtor informs the court—and, by extension, creditors—whether they intend to keep and pay for the property or surrender it to the lienholder.
Property Surrender in a Chapter 13 Bankruptcy
Surrender of property in a Chapter 13 bankruptcy case begins similarly to a Chapter 7 surrender, with the debtor stating their intent to surrender the property. What happens to the remaining debt, however, is determined by the Chapter 13 plan.
In a Chapter 13 plan, the lender is prohibited from taking further collection measures, such as filing a lawsuit to recover the unpaid balance, as long as the plan payments are current and the debtor complies with all other procedural requirements and court orders.
Sometimes it Makes Sense to Give Property Up.
Even though Chapter 13 is frequently the preferred option for debtors who want to keep their property, you might own some assets that are no longer as valuable as they were when you first bought them, such as a home whose value has dropped significantly. Even if Chapter 13 can help you lower your payments from what they were before you filed for bankruptcy, it’s also possible that you will decide it’s not worth it to keep paying for a car you’re far behind on. Giving up that property might be advantageous for you.
Giving Up Collateral and Making a Debt Unsecured
Surrendering collateral is the act of handing over your property to the lienholder. Surrendering collateral is the act of handing over your property to the lienholder. You will still owe the amount if the property’s value does not eliminate the debt. Surrendering property during your Chapter 13 bankruptcy reduces the likelihood of having to repay the entire outstanding amount.
Bankruptcy Attorney in Victorville, CA
Do you need a second chance but need to figure out how filing for bankruptcy can help? Stop worrying about debt and call Winterbotham Parham Teeple, a PC at 800.400.9000. A bankruptcy attorney in Victorville, CA, is ready to help you regain control of your life.