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REASONS TO FILE CHAPTER 13: OWNING TOO MUCH PROPERTY

CHAPTER 13: OWNING TOO MUCH PROPERTY

Another reason to file Chapter 13 is having too much property.  If you have too many assets, you may exceed your bankruptcy exemptions.  Bankruptcy exemptions protect what you own during the bankruptcy.  If you exceed these bankruptcy exemption limits, you could lose some of your property if you file under Chapter 7.

KEEP MORE PROPERTY BECAUSE YOU ARE REPAYING A PORTION OF YOUR CREDITORS

Every dollar that is paid to general creditors in your Chapter 13 allots you another dollar worth of property you can protect in the Chapter 13 case.   For example, if you have $5000 “too much” in property, you must pay $5000 to general creditors during your Chapter 13.  If you paid that $5000 (in this example) to your general creditors during the Chapter 13, you would be able to keep all of your property.

Therefore, for example, if your house value was $20,000 over your protected amount, you would need to pay $20,000 in general (unsecured) creditors back in Chapter 13 to protect your house.   If you want to pay your house payment or car through the Chapter 13, these repayments do NOT count.   It is only your UNSECURED (general) debts that must be repaid to extend how much you can keep in Chapter 13.

WHAT AMOUNTS ARE PROTECTED ALREADY?

Currently (2016) in the state of Indiana, there are three primary amounts that are protected in Chapter 7 and Chapter 13 bankruptcy.   The below chart shows the amounts you can protect:

  1. Residence (your home) $17,600
  2. Personal Property $9,350
  3. Cash or Intangibles $350

It is important to note that these amounts double if there is a married couple filing.   In addition, these are not the only exemptions in Indiana.   It is also important to note that exemption planning in bankruptcy is a topic that requires individually-tailored advice of a Indiana bankruptcy attorney.

CONCLUSION: CHAPTER 13 CAN PROTECT YOUR PROPERTY

If you have too much property to safely file Chapter 7, Chapter 13 may be a powerful solution to your problem.  You are only required to repay the amount of property that is NOT protected by your bankruptcy exemptions.  If you finish your bankruptcy  plan, you could be debt free and able to keep all of your property.