Keeping your home and car under Chapter 7

Large amounts of personal debt aren't unusual nowadays, but the variation is often in each Mississippi resident's ability to pay back that debt. For residents of Southaven and surrounding areas, the answer to insurmountable debt is often Chapter 7 bankruptcy. Under this type of personal bankruptcy a debtor is able to make a fresh financial start via asset liquidation. Many wonder, though, if they may be able to file for Chapter 7 while still holding onto their home or their car.

In Mississippi, it is possible to keep both your home and your vehicle while filing for Chapter 7. Under Chapter 7, some property is exempt - it gets to stay with the debtor instead of going towards the bankruptcy estate to be sold for paying back creditors. Exempt property is usually that which is necessary for day-to-day living; a person can't get back on their feet without some of the basics of life. In Mississippi, these basics include homes and cars.

However, the courts don't simply allow a filer to hang onto their home and car under Chapter 7. The home is considered in light of the "homestead exemption," which in Mississippi is up to $75,000. This means that if a home is worth $75,000 or less, a filer may keep it. Essentially, creditors aren't allowed to go after up to $75,000 of equity in a filer's home. Regarding cars, the personal property exemption is $10,000. If your car is valued at less than that amount, or if you have less than $10,000 worth of equity in their vehicle, usually you can keep that car under Chapter 7.

With both cars and homes, however, filers must be diligent in making timely payments in order to keep these often-costly personal assets. Sometimes a filer may discover the need to downgrade to a more affordable vehicle anyway, while for others being able to keep the car or house can be a lifesaver.

Source: FindLaw, "Exempt vs. non-exempt property under Chapter 7," accessed Sept. 13, 2014

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