No. You get to keep basic assets in order to get back on your feet on the flip-side of bankruptcy. One of people’s biggest concerns is losing their home or other essential stuff. Property can be protected by what are called exemptions. Under Texas state exemptions, you can exempt your home and one car per licensed driver. Ignore the street myths about losing property in bankruptcy. Consult with an experienced bankruptcy attorney who will let you know if any of your property is at risk.
90% of people get to keep all of their property in a Chapter 7 bankruptcy. Of course, there are limits on exemptions. To learn more about the current limits on exemptions, check out “What Property Can I Keep?” Bankruptcy attorney, Carol Cross Stone, will review your assets with you and discuss the impact of bankruptcy. Besides your home and vehicles, generally, 401k’s, IRA’s, pensions, insurance proceeds are also exempt. Texas has very generous exemptions. Consult us early so we can do pre-bankruptcy planning (if necessary) and determine what exemptions are available to help you protect your property
Voluntarily Giving Up Property in a Chapter 7 Bankruptcy
On the other hand, you may want to surrender back collateral. But usually, this is not required unless you no longer want to pay a secured loan. Giving up, or “surrendering” property can be a blessing if a loan has become unaffordable, and the secured item is not essential. Frequently, people surrender a home or a motor vehicle where there is no equity. Other reasons for giving up property is where the loan payment is too big for your current budget. If you choose to surrender property, the entire debt will be discharged. This means the creditor gets the property back, but can no longer collect on the debt. Once the bankruptcy discharge is complete, the creditor must report the account as having a zero balance on a credit report.