There are numerous myths about bankruptcy – ideas that many people hold that are not quite true or that are simply incorrect. These myths have, to a significant degree, shaped our culture’s perception of and attitude towards bankruptcy. This misinformation keeps good, honest debtors from pursuing this worthy tool for debt relief. That needs to change.
So as part of a new series of blogs, I will be exploring one myth each Monday, the goal being to bring some clarity to some confusing and misunderstood areas of bankruptcy law.
Bankruptcy law as a whole is very confusing, so when considering your debt relief options, consult a competent attorney that knows not only bankruptcy but also other debt relief alternatives. Avoid the bankruptcy mills and instead seek a counselor that will help you evaluate your options and will walk with you during this stage of your life.
Bankruptcy Myth: I will lose my home, my car, even my possessions if I file for bankruptcy.
TRUTH: In most cases, you can keep all of your possessions, including your home and car.
Tennessee law allows you to protect thousands of dollars of your assets, which should cover most everything that you own. And in reality, most of the time, the Trustee in your case is not interested in your usual home furnishings or your DVD collection. They are interested in the more valuable items you may own like fine antiques, rare baseball cards, or collectors edition guitars, for example. We can still protect them through bankruptcy, but in a different way.
The simple truth about your vehicles and your home is this: if you are current on it, and you want to keep it, there’s a high probability that you can. I never say things in absolutes (that’s funny, never saying things in absolutes), but if you have a car or home loan and you are making the payments, then you can reaffirm (which is a bankruptcy term meaning to keep making payments and keep the car or home). If the vehicle is paid for, then we have to consider it as part of your personal property, and we protect it accordingly. If your home is paid, we can still protect it – it takes a new calculation, but it is possible.
Remember: you do have the option in bankruptcy to give the home or vehicle back to the creditor (surrender it), even if you are current, even if you are significantly behind.
These are the general facts, but your situation may not fall within these generalities; so I strongly suggest that you consult an attorney before relying upon this post or any others on our website.