If you file for Chapter 7 bankruptcy, you will need to fill out a form called the Statement of Intentions. On this form you tell the court, bankruptcy trustee, and secured creditors what you intend to do with your secured and leased property. Do you want to keep your home, car or boat, or give them back to the creditor? These are the types of decisions you will need to make when filling out your Statement of Intentions. However, it is important to understand that you have options. Below are four different ways you can handle your property in a Chapter 7 bankruptcy case.
Surrender the Property
Choosing to surrender the property means you are returning the property to the creditor. If you do not wish to keep the property, this is the simplest option. If you surrender your property, your bankruptcy discharge will most likely wipe out your personal liability for the debt. This may also be your best option if the property is worth less than you owe or you cannot afford to make payments on it.
Reaffirm the Debt
If you want to keep the property, you can enter into a Reaffirmation agreement, where you agree to repay the debt pursuant to the terms and conditions of the contract. In other words, the debt you owe passes through the bankruptcy. If you stop making payments on the debt, you are still liable for the debt notwithstanding your bankruptcy discharge. If you decide to reaffirm, you may be required to attend a court hearing for the judge to ensure that the agreement is in your best interest.
Redeem the Property
Another option that allows you to keep your property is by redeeming it, which means you buy it back from the creditor. You do this either by paying either the replacement value of the property or the amount you still owe on the debt. This option is rarely used because it requires a lump sum payment, which most people filing for bankruptcy cannot afford.
Retain the Property
A fourth option is to retain the property, which means you will keep the property without reaffirming or redeeming it. Some creditors will allow you to do this if you remain current on your payments. However, the drawback of this option is that it will not help you rebuild credit.
As you can see, you do not always have to give up your property when you file for bankruptcy. If you can afford to continue making payments, then you can keep it. Just be sure you have a clear idea of what you intend to do with your property before you file for bankruptcy. Once your case is filed, your Statement of Intentions will be due to your creditor within 30 days, or by the date of your first meeting of creditors. To be sure that you select the best option for your property in a bankruptcy case, it is advisable to consult a West Palm Beach Bankruptcy Attorney. To learn more, call the expert team at Kelley & Fulton today.