In the Chapter 13 proceeding, the debtor has the right to retain the property but must make and pay the arrears on secured debt. Chapter 13 does not allow you to give away any of your property: In fact, you get to keep all of your property. But that does not in any way imply that you would not be required to pay for some of those things. You are permitted to shield, or “exclude,” a set sum of equity in the property that you will need for a house and a job. Any asset that is considered nonexempt that you wish to retain, such as a boat or a baseball card collection or any luxury item, will have to be repaid into your Chapter 13 plan.

And if you wish to retain a home, auto or some other form of property which you still have outstanding on, and which you pledged as security (and admittedly that was a viable option to repossess it if you don’t pay), you have to keep up with the payments and be in a position to make up for missed payment(s).

Why You Might Actually Lose Property If You Enter Chapter 13

Nobody will sell any of the property you have in Chapter 13 bankruptcy. But they don’t receive it for free, this means that the market is more intelligent than the government. Here are the rules.
If you are in a position whereby all your property is exempt, you will be in a position to retain it without incurring penalties. However, if it qualifies for the ‘nonexempt’ category, one has to cater for the costs. But how can you determine which is exempt or nonexempt property?
Your state picks the property that you will require for a new beginning in bankruptcy (some states will allow you to elect between state exemption and federal exemption). You will also be allowed to take the exempt property and this will be at no fee and this will be for whichever type of bankruptcy you are to file.

As for your nonexempt property, the property you are allowed to keep pursuant to an exemption, what happens to it depends on the chapter of your Bankruptcy.

  • Chapter 7 bankruptcy. The Chapter 7 trustee takes and sells your nonexempt property and uses the money to pay off your unsecured debts.
  • Chapter 13 bankruptcy. Contrary to what happens in Chapter 7 bankruptcy, the Chapter 13 bankruptcy trustee does not liquidate your nonexempt property. You will only be able to repay the assessed value of any and all nonexempt property to your unsecured creditors through your payment plan.

Consult More in Bankruptcy Exemptions.

Property That is Not Protected by Exemption Laws May Cause You to Pay More Under Chapter 13 Plan

The debts that you are expected to pay in full in your Chapter 13 plan: These include arrears of mortgage and certain priority debts which include tax. Nevertheless, the amount to be paid to your ordinary unsecured creditors which are entities such as credit card companies depends on income, expense and non-exempt property. , particularly, you have to contribute all of your ‘disposable income’ – the money after allowable expenses for daily needs.
However, there’s more. If you have other assets which are exempt with the IRS, you are to pay the greater of your disposable income or the value of the nonexempt assets. Thus, you retain your nonexempt belongings however, possibly, to compensate the desires of the unsecured creditors, you pay a higher dividend through your repayment plan.

Indeed, possessing many nonexempt assets may bar you from Chapter 13 Attorney In California if your income is too low to meet the defined payment.