In a chapter 7 case, you can hang on to all the property that is exempt from the claims of creditors. While determining whether property is exempt, you have to keep a few facts in mind. The worth of property is not the amount you paid for it, but what the value is now. Normally, the trustee is concerned in the resale value of your property, so for most personal effects this is the garage sale worth of your property.

You also only have to look at your equity in property. This means that you count your exemptions in contrast to the full value, minus any money that you owe on mortgages or liens. For instance, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 equity you have in the home. While your exemptions permit you to hang on to property even in a chapter 7 case, your exemptions don’t make any difference to the right of a mortgage holder or car loan creditor to seize the property to cover the debt if you are behind. If you are behind schedule in payments and can afford to make the loan payment, and to make the amount you are behind over a time frame of three to five years, you ought to consider a chapter 13 bankruptcy.

In a chapter 13 case, you can hang on to all of your property if your plan meets the requirements of the bankruptcy law. Most of the time, you will be required to pay the mortgages or liens as you would if you didn't file bankruptcy.

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