Bankruptcy and Your Property

Many debtors are able to keep their cars in bankruptcy. The basic strategies for keeping an automobile depend primarily on the value of the car, the existence and amount of a car loan, and the bankruptcy chapter chosen. Please contact our bankruptcy attorney to discuss the particulars of your situation.

Bankruptcy attorneys and trustees are always asking about transfers of property, particularly in chapter 7 cases. Why do they care? A principal purpose of bankruptcy is to ensure a fair distribution amongst a debtor's several creditors. To that end, there are two kinds of pre-bankruptcy property transfers that can be a particular source of concern:

It would be very unusual to lose pets in bankruptcy. While pets are quite valuable to their owners, few people are interested in buying previously owned pets. Hence, the market value for a pet is low, and the market value is what is important for most bankruptcy purposes. Given this market valuation, it is usually possible to claim the value of a household pet as exempt under statutory property allowances.

The debtor's property under the administration of the bankruptcy trustee is considered the bankruptcy estate. When a trustee abandons property, he or she has released it from the estate. Property possessed by the debtor is typically abandoned to the debtor; however, property encumbered by liens might be abandoned directly to the secured lien holder for repossession.

What property, if any, you will have to turn over to your creditors depends on several factors. First, you are entitled to certain property allowances called exemptions. Most debtors in North Carolina will be able to claim North Carolina statutory exemptions. There are several of these exemptions, but examples would include $35,000 in value for a homestead and $3,500 in value in a car. Furthermore, in a chapter 13 repayment plan, you do not have to turn over property worth more than the allowances if you pay the extra value into the plan from another source, such as future wages.