Can I File for Chapter 7 and Keep My Property?

One of the first questions from all of my clients is: “Will they take my property?”  The answer: “It depends on the type of property and how much it is worth.”  The process of determining whether property will be liquidated depends on the amount of equity in the property.  Equity is the monetary value of the property minus the amount owed. 

As an example, let’s look at a house with a mortgage:  If your house is valued at $100,000.00, but you still owe the bank $75,000.00 on your mortgage, then you have $25,000.00 in equity.  Additionally, if your house is valued at $100,000.00 and you have paid off the mortgage, then you have $100,000.00 in equity.

Equity and Exemptions

Determining the value and equity of your property is a very important part of bankruptcy preparation.  Why?  The law allows you to exempt a certain amount of equity in your property.  In Tampa, Florida, where I practice, the law allows you to exempt $1,000.00 in personal property and $1,000.00 in your vehicle.  (These amounts are doubled if you file jointly with your spouse.)  Therefore, if you have less than $1,000.00 in equity in your personal property or car, then you will get to keep the property.

You Will Keep Your Home

What about your house?  Luckily for debtors in Florida, they are protected by the Homestead Exemption in our State Constitution.  This means that in almost all circumstances you will get to keep your house.

While this may seem simple, there are many other exemptions.  For this reason, it is a good idea to discuss your situation with a bankruptcy attorney, so that you can keep as much of your property as you can.