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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2815
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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My Husband was layed off for a year and 3 months. We are in

Customer Question

My Husband was layed off for a year and 3 months. We are in debt with hosp and credit cards 25000. we r two months behind on our house payment. My husband got called back to work 3 weeks ago. We have rental property that we have tried to sell but couldnt My question is Can we keep our house cars and rental property if we file bankrupcy so that we can get a fresh start?
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 6 years ago.
Hi and thank you for your question.
Hospital bills and credit cards are dischargeable in bankruptcy.
If you want to file for chapter 7, you should be current with the mortgage on your home if you want to keep it, as well as being current on the rental property and the cars.
You can keep these, if you are current and there is no equity in them.
If there is equity, you should look into chapter 13 so you can protect the equity by paying back a percentage of debts to do so.
Talk to a local bankruptcy attorney to review your assets and available exemption protections as well as reviewing your income and expenses to fit you into the proper chapter to file. THanks for your question and good luck.
Customer: replied 6 years ago.
sorry i need more info. My house has minus 15000 dollars. The reason is because about four years ago we took our equity from our house to buy the rental property ,,and repair so the rental property has a plus 30,000 dollars but it was really from our primary homes equity . We about break even on rental payments with our rental income.
Expert:  Terry L. replied 6 years ago.
Unfortunately the equity is in the new home, so that is unprotected in a chapter 7 case. IF you file chapter 7, the court can liquidate the rental to get to that equity. The money you used from the home equity line on your home, is a lien on your home, and thus does not matter in a bankruptcy case. It only goes to show what equity is available in that property.

Therefore, if no equity in your home, then it will not be affected in a bankruptcy case, and you can keep it, just have to make all mortgage and equity line payments.

It sounds like the court could liquidate the rental property to get to the exposed equity to pay your creditors though if you did file a chapter 7, hence you should look at a chapter 13 to protect that equity if you want to keep it.
Customer: replied 6 years ago.
what is the difference between them 7&13 and would it be better credscorewise to do a 13
Expert:  Terry L. replied 6 years ago.
Chapter 7 is a debt elimination.
Chapter 13 is a debt consolidation, where you would pay back a portion of the debt over the next 3-5 years, enough to protect the equity and based on your disposable income.

There is no difference on your credit report between the two.