What assets can I keep after declaring bankruptcy?


The federal bankruptcy code governs how bankruptcy courts operate. However, individual states can still implement laws regarding what happens to property during the process.

Before you file a personal bankruptcy, you will want to determine for which type you qualify.

Chapter 7 vs 13 bankruptcy

A Chapter 7 bankruptcy, also known as liquidation bankruptcy, may make you assume you will lose all your property. However, Delaware exemptions allow you to keep the majority of it. You will need to pass a means test to determine if you qualify for a Chapter 7.

If you have a steady income, you may qualify for a Chapter 13 bankruptcy. The court can force your creditors to reduce your debt and accept the Chapter 13 payment plan. You get to keep most of your property and make monthly payments on a schedule for three to five years. Upon completion, you do not have to pay the remaining balance of your debts.

Secured vs unsecured debt

When you owe a debt to a creditor who has no right to seize property if you default, that is an unsecured debt. When you owe a debt where the creditor could seize property, that is a secured debt. A benefit of filing a Chapter 13 is that you may get to pay off only part of the debt you owe on property, such as your home, vehicles and even furniture, and at the end of the payment period, you still get to keep that property.

Every case is different, and what you keep and lose depends on your income and the type of bankruptcy for which you qualify.