You’re facing mounting bills and you worry about losing everything you’ve worked for. Fortunately, you can keep your home and car when you file for Chapter 13 bankruptcy. In fact, Chapter 13 bankruptcy specifically helps you reorganize your debts while protecting your valuable assets. So let’s explore exactly how this protection works for your property.
Your home stays protected
First and foremost, filing for Chapter 13 triggers what’s called an automatic stay. This legal protection immediately stops foreclosure proceedings in their tracks.
Beyond that, Tennessee law lets you protect up to $5,000 in equity in your primary residence through homestead protection, or $7,500 if you file jointly with your spouse.
Even better, you can catch up on missed mortgage payments gradually through your repayment plan over three to five years. Now that you understand how your home receives protection, let’s look at what happens to your vehicle.
Your car remains yours
Just like your home, the automatic stay also prevents lenders from repossessing your vehicle. Similarly, you can also include past-due car payments in your repayment plan.
What’s more, if you purchased your car more than 910 days before filing, you may even qualify for a “cramdown.” This valuable option lets you reduce the loan to your car’s current fair market value instead of the full balance.
However, while these protections offer powerful benefits, you must meet specific requirements to maintain them.
Meeting the requirements
Of course, to keep both your home and car, you need to satisfy certain conditions. Here’s what you must demonstrate:
- Proof of income: You must show regular income to cover your bills and trustee payments.
- The liquidation test: Your plan must pay creditors at least what they’d receive in Chapter 7.
- Plan adherence: You must make all court-ordered payments on time to avoid dismissal.
Ultimately, meeting these requirements ensures you successfully complete your bankruptcy while keeping your assets. And with the right support, you can navigate these conditions confidently.
Get professional legal guidance
That’s where legal help becomes invaluable. Chapter 13 bankruptcy offers you a real path to financial recovery without losing what matters most. An experienced bankruptcy attorney can evaluate your unique situation, help you create a feasible repayment plan and ensure you meet all necessary requirements. Most importantly, they can help you protect your home and car while you work toward a fresh financial start.