• Will I Lose my Car if I File Chapter 7?
  • September 1, 2011 | Author: John C. Caraker
  • Law Firm: John C. Caraker, P.C. - St. Louis Office
  • Many people believe that if they file Chapter 7 bankruptcy, they will automatically lose their house or car.  However most times that will not happen.  A Chapter 7 is a liquidating type of bankruptcy where a court-appointed trustee has the authority to take property and sell it to pay the creditors.  Most of the time in this economy the value of the property is less than what is owed against it in which case there is no equity for the trustee to take.  We must also take into the account the cost of liquidation and any exemptions which may exist.  For example in Missouri the exemption for equity in the principal residence is $15,000.  It is $3,000 per filing debtor on the title for vehicles.  Other exemptions may exist as well.  After taking the exemptions against equity, there is rarely anything left for the creditors and, as a result, the trustee will not take the property.  Keep in mind that exemptions are a creature of state law and you should consult an attorney in your state to determine what your exemptions may be.  Also, if there is a loan against the property, you usually must be current with the creditor holding the loan or the creditor may ask the court to allow them to repossess the property.  If you are not current on the loan, you should consider Chapter 13.  Again you should consult a competent attorney within your jurisdiction to discuss the details of your particular situation.