Can I Keep My House and Car and Still File Bankruptcy?

“If I file for bankruptcy, will I get to keep my house and car?” This is an excellent question. One of the main jobs a bankruptcy attorney does is to analyze whether or not the property an individual has can be protected while still filing for bankruptcy.

In Illinois, an individual can protect up to $15,000 worth of equity in real estate property. In joint cases, where spouses are filing together, you can combine $15,000 per each spouse and protect up to $30,000 worth of real estate property.

In reality, you can protect a little bit more than $30,000.00 as a joint couple, because a trustee has to look at what it would take to sell that property.

There are brokers’ fees and closing costs. Further, how much would be left after they have applied each individual their exemption? Would there be anything left to administer to creditors? In most cases, if there is significant equity the answer will be “no” and the individuals will be able to keep the house provided they continue to make their monthly payments.

The same theory applies to vehicles. In the state of Illinois, an individual can protect up to $2,400 of equity in a single vehicle. In a joint case, you are allowed to protect $4,800 worth of equity in only one car, if both spouses take the exemption.

Again, the trustee is going to look to see what the value of the car is and how much is owed on the car. Once the equity is paid to the individual, is there any ability to pay anything to the creditors? In most cases, the answer is “no.” Most people do not have significant equity in their vehicles and they wind up continuing to make their monthly payments on those items.

In most Chapter 7 cases, if the attorney has done a good job, the individual is going to keep their property free and clear, provided they continue to make their monthly payments on the loan.
So, it is really a great fresh start. You eliminate a lot of debt and you get to keep the property you want, provided you continue to make your monthly payments on time.