3 items you can keep when you file for bankruptcy

Many people are apprehensive about bankruptcy because of the common misconception that you will have to liquidate all your assets. On the contrary, the objective of bankruptcy is to facilitate repayment of debt, and if this can be done without liquidation, it is entirely possible that you can keep your most valuable assets while still relieving the debt that has become a burden.

The following are three examples of what you may be able to keep even after filing for bankruptcy. Whether your assets are liquidated depends largely on whether you file for Chapter 13 or Chapter 7, and you should consult with a legal representative to determine which is the right option for you.

Your house 

Whether you are able to keep your home in bankruptcy is dependent upon the status of your mortgage. If you have fallen behind, you may have to reorganize the debt with your lender, and the terms will be subject to approval. You should consider, too, that you will need to have the income to sustain your debt repayment installments as well as your mortgage payments. 

Your car

For most people, their vehicle is a necessity for getting to and from work. Lenders want to make it as easy as possible for you to successfully repay your debts, so it is counterintuitive that they would move to seize your car and potentially jeopardize your income. If you are behind on payments, however, you may still need to reorganize this debt in accordance with terms that are agreeable to your lender.

Exempt property

What else can be kept in a bankruptcy to avoid liquidation? Typically, any property that is classified as exempt is not subject to liquidation when you file. According to the Michigan Legislature, this includes additional items such as family pictures, crops, stocks, jewelry and prescribed health aids. These items typically cannot be seized and liquidated in the course of bankruptcy.