Will I Keep All of my Non-Exempt Assets in Chapter 7 Bankruptcy?

You have several options available to you to keep your non-exempt property. With regards to your car, it depends on whether you are currently financing it or own it with no lien.

If you have a lien against your car by the creditor you used to finance it, the best option would be to reaffirm the debt. By doing so, you are promising to continue making the car payments as required by your financing agreement. You do have an option to “strip” or “cram down” the unsecured portion of the car debt though.

For example, if you’ve completed schedule D of the bankruptcy petition, you may have noticed the column called “unsecured portion”. This is essentially the difference between the cars market value and the amount on the loan. You may be able to eliminate the unsecured portion and have to repay only the market value of the car. This means you end up repaying less than the amount you originally financed, making your car payment potentially much lower.

If you do not owe any money on the car, then you will have to “redeem” the value of the car. What this means is that, in return for keeping your car, you offer the trustee a lump sum of cash equivalent to the market value to distribute to creditors that would otherwise benefit from the sale of the car.

As far as the electronic equipment, the options are more or less the same as the situation with the car. Since you use it for work, double check your exemptions because usually work equipment has substantial protection by exemptions.

Talk to a bankruptcy lawyer to find out what options would make sense in your case and how best to build your case so that you keep as much property as you can while also getting your fresh start promised by US bankruptcy law.