How to file bankruptcy and keep your home and car?

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Filing for bankruptcy can be a daunting process, but it doesn’t necessarily mean losing your home and car. With the right approach and understanding of the bankruptcy laws, it is possible to keep your assets while seeking debt relief. In this article, we will explore how to file bankruptcy and still retain ownership of your home and car.

Understanding Bankruptcy

Before delving into the specifics of keeping your home and car during bankruptcy, it’s important to have a basic understanding of the different types of bankruptcy filings. The two most common types for individuals are Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 involves the sale of non-exempt assets to repay creditors. However, exemptions exist that allow you to protect certain assets, including your home and car, up to a certain value.

Chapter 13 Bankruptcy: Chapter 13 bankruptcy involves creating a repayment plan to pay off your debts over a period of three to five years. This type of bankruptcy allows you to keep your assets, including your home and car, as long as you continue making the agreed-upon payments.

Homestead Exemption

One key aspect of protecting your home during bankruptcy is utilizing the homestead exemption. This exemption varies from state to state and determines the amount of equity in your home that can be protected from creditors. It’s important to research and understand the homestead exemption laws in your specific state.

In some states, the homestead exemption is unlimited, meaning you can protect the entire value of your home. In other states, there may be a cap on the amount of equity you can protect. Consulting with a bankruptcy attorney can help you navigate the specific laws in your state and maximize your homestead exemption.

Vehicle Exemption

Similar to the homestead exemption, there are also exemptions in place to protect the equity in your vehicle. These exemptions vary by state and typically have a maximum value limit. If the equity in your car is below the exemption limit, you can usually keep your vehicle during bankruptcy.

It’s important to note that if you have a car loan, the lender may have a lien on the vehicle. In this case, you will need to continue making payments to the lender to retain ownership of the car. Including the car loan in your bankruptcy filing may allow you to restructure the loan and make the payments more manageable.

Working with a Bankruptcy Attorney

Navigating the complexities of bankruptcy law can be challenging, especially when it comes to protecting your home and car. Hiring a knowledgeable bankruptcy attorney can greatly assist you in understanding the laws specific to your state and ensuring that you take the necessary steps to retain ownership of your assets.

A bankruptcy attorney will guide you through the process, help you determine which type of bankruptcy is most suitable for your situation, and ensure that you maximize the exemptions available to you. They will also assist in creating a repayment plan if you opt for Chapter 13 bankruptcy.


Filing for bankruptcy does not automatically mean losing your home and car. By understanding the different types of bankruptcy, utilizing exemptions, and working with a bankruptcy attorney, you can navigate the process while keeping your assets intact. It’s important to research the specific laws in your state and consult with a professional to ensure the best possible outcome.


– United States Courts:
– Legal Information Institute:
– National Association of Consumer Bankruptcy Attorneys: