Can I keep my car if I file for bankruptcy?

What you can keep in a bankruptcy case depends on what Chapter you file and where you live.

In most instances, bankruptcy allows you to keep one vehicle, and possible a second.

CHAPTER 7
Normally, in a Chapter 7 case, you can keep whatever you can exempt under the allowed "exemptions". 
An "exemption"  is something that you may keep, regardless as to how much money you owe to creditors other than the car loan.
 
There is a State Exemption scheme in many states and there is a Federal Bankruptcy Code exemption scheme. 

If you live in New Hampshire, where I practice, you can choose either (1) the State Exemptions or the (2) Federal Exemptions. 

Under the New Hampshire State Exemptions, as well as under the Federal Bankruptcy Code exemptions, you can normally exempt one car (up to a certain amount in value) - and there is a "wild card" exemption to cover possibly a second vehicle.  Please click onto my articles on "Exemptions - NH State Election" and "Exemptions - Federal Election" for more information.


CHAPTER 13.
In Chapter 13, you would still choose either the State or Federal Exemption scheme. However, as long as you make the Chapter 13 payments under your Chapter 13 re-payment plan, you can normally keep ALL of your assets. 

The reason you list the exemptions in Chapter 13 is to determine how much equity you have in your assets after application of exemptions.  Why? Because, in Chapter 13, under your repayment plan you should pay your unsecured creditors (normally credit card debt or medical bills) the same percentage they would receive if you liquidated all of your assets after application of the exemptions - essentially, pennies on the dollar spread over the life of your Chapter 13 re-payment plan.

Can I keep my house if I file for bankruptcy?

What you can keep in a bankruptcy case depends on what Chapter you file and where you live.

In many, many instances, bankruptcy allows you to keep your house and is the only tool to allow you to keep your house.

CHAPTER 7
Normally, in a Chapter 7 case, you can keep whatever you can exempt under the allowed "exemptions". 
An "exemption"  is something that you may keep, regardless as to how much money you owe to creditors. 
There is a State Exemption scheme in many states and there is a Federal Bankruptcy Code exemption scheme applicable to all states. 

If you live in New Hampshire, where I practice, you can choose either (1) the State Exemptions or the (2) Federal Exemptions.  If you go to my prior articles, click on "exemptions", and it will tell you what you can exempt under the Federal or State Exemption schemes.

Under the New Hampshire State Exemptions, you have a homestead exemption of $100,000.  Under the Federal Bankruptcy Code exemptions, you can exempt $21,625 in value of your home.

So, if you own a home worth $250,000 and owe $150,000 on the mortgage, you have an equity cushion of $100,000.  Under the New Hampshire State Exemptions, you could protect all of the equity in your home (remember, there is a $100,000 homestead exemption) and go through Chapter 7 without the bankruptcy trustee touching your home.  You can keep it.  The only issue is then between you and the mortgage holder on your home.  If you are current in your mortgage payments, then regardless as to whether you file Chapter 7, the mortgage holder cannot foreclose on your home as long as you are current in all of your obligations under the mortgage. Many people who are overwhelmed by credit card debt or medical bills, stay current on their home mortgage payments, and file Chapter 7 to get rid of the credit card debt and medical bills - and still keep their home. 

If you are not current on your mortgage payments, then the lender may foreclose - but you still get to keep the surplus proceeds over and above what you owe on the mortgage on any foreclosure sale of your home.

CHAPTER 13.
In Chapter 13, you would still choose either the State or Federal Exemption scheme. However, as long as you make the Chapter 13 payments under your Chapter 13 re-payment plan, you can normally keep ALL of your assets. 

The reason you list the exemptions in Chapter 13 is to figure out how much equity you have in your assets after application of exemptions.  Why? Because, in Chapter 13, under your repayment plan you should pay your unsecured creditors (nomrally credit card debt or medical bills) the same percentage they would receive if you liquidated all of your assets after application of the exemptions - essentially, pennies on the dollar spread over the life of your Chapter 13 re-payment plan.

Many people file Chapter 13 because they are behind in their mortgage payments and just cannot catch up, but they want to keep their home.   Chapter 13 gives the home owner the opportunity to keep their house. 

Let's say Mrs. X pays $1000 monthly to her bank for her mortgage but she was out of work for a few months and fell behind 4 payments - she now owes the bank $4000 in past-due payments, called "mortgage arrearages".  She tries to get a loan modification, but the bank just will not work with her.  Mrs. X tells the bank she can still make her $1000 monthly mortgage  payment if they would just let her spread out the $4000 she owes in mortgage arrearages over time.  Mrs. X says to the bank, if you just let me spread the $4000 I owe in back payments over 36-months, I can catch up.  The bank says "no". They tell her they are going to foreclose on her house.

[When a bank says the "f" word ("foreclosure") - take action.  Please click on the articles under "foreclosure" on my blog to learn more about foreclosure - because in New Hampshire, the bank normally does not have to take you to court to foreclose on your home and you can be on the street in a matter of months.]

Mrs. X can force the bank to take her deal by simply filing Chapter 13 and sucessfully completing  the same 36-month re-payment plan!

EXEMPTIONS - State of New Hampshire

When someone files for bankruptcy protection, they may “exempt” certain assets from the reach of their creditors.  That means that regardless of the bankruptcy filing, he/she may keep the exempt assets up to the value of the allowed exemption.

In New Hampshire, a person who files for bankruptcy may choose either the New Hampshire State exemptions or the Bankruptcy Code Exemptions under 11 U.S.C. § 522 - but he/she cannot choose both. ( Please read the separate posting on the Bankruptcy code exemptions).

STATE EXEMPTIONS:  The state exemptions are those assets and wages which the state would normally not allow creditors to take to satisfy a debt (with limited exceptions such as taxes and child support).  There are many other non-bankruptcy federal exemptions that can be taken as well.

BANKRUPTCY CODE SECTION 522 EXEMPTIONS:  If your situation fits better within the Bankruptcy Code exemptions, then the person who files for bankruptcy may elect the Bankruptcy Code Exemptions instead of the below state exemptions (Please read my separate post on the Bankruptcy Code Exemptions). 

Below are NH State exemptions, which also include a list of certain allowed exemptions from certain Federal code provisions, as well.  Be aware that there are some very limited exceptions to exempting your assets and wages from the reach of creditors.  For example, if the IRS has asserted a valid lien for non-dischargeable tax debt, the IRS lien may reach the exempt assets.

                STATE EXEMPTIONS.

HOMESTEAD

RSA 480:1 - $100,000 – every person is entitled to $100,000 worth of his or her homestead or of his or her interest therein as a homestead. 

The homestead right created by this chapter shall exist in manufactured housing [mobile home], as defined by RSA 674:31, which is owned and occupied as a dwelling by the same person but shall not exist in the land upon which the manufactured housing is situated if that land is not also owned by the owner of the manufactured housing. 

Per RSA 480:3-a, the owner and the husband or wife of the owner are entitled to occupy the homestead right during the owner’s lifetime.  After the decease of the owner, the surviving wife or husband of the owner is entitled to the homestead right during the lifetime of such survivor. 

Per RSA 480:4, the homestead right is exempt from attachment during its continuance from levy or sale on execution, and from liability to be encumbered or take for the payment of debts, except in the following cases:

in the collection of taxes;

 in the enforcement of lien of mechanics and others for debts created in the construction, repair or improvement of the homestead;

in the enforcement of mortgages which are made a charge thereon according to law;

in the levy of executions as provided in this chapter.

RSA 512:21(VIII) – money, rights, and credits of the defendant in the hands of any insurance company or its agents whenever the same is due on account of the loss of, or damage by fire to, any property which by the laws of this state was exempt from attachment or levy on execution; provided, that whenever a building or structure so damaged or destroyed was part of the homestead, only so much of the amount due therefore shall be exempt as, together with the value of the part of the homestead remaining, if any, shall equal the sum of $5000. [homeowners insurance proceeds]

WAGES

46 U.S.C. § 11109 -  master or seamen’s wages while on a voyage, applies to individual on fishing vessels or fish processing vessels.

45 U.S.C.  §352(e) -  railroad workers unemployment.

RSA 281-A:52  - workers compensation (except for certain court approved medical reimbursements  or child support)

RSA 282-A:159 – unemployment (except for over payments, over issuance of food stamps, income tax withholding, child support)

RSA 512:21 (I)  - wages for labor performed by defendant after service of the writ.

RSA 512:21 (II)  - except as otherwise provided at section X, wages earned before service of the writ except in actions founded upon a debt on a judgment issued by a NH court.  In such cases, the wages earned before service of the writ is 50 times the minimum hourly wage for each week which shall be exempt.

RSA 512:21 (III)  - wages for the personal services and earnings of the wife and minor children of the defendant.

RSA 512:21 (V)  - funds held by the trustee in the capacity of clerk, cashier or other employee of the defendant which were received in the ordinary course of such employment.

RSA 512:21 (VI)  - fees due to the defendant for attendance at court as a juror or witness.

RSA 512:21 (IX) – wages of the defendant earned before the service of the writ upon the trustee, to the amount of $50 for each week, shall be exempt in any action founded upon any loan contract subject to the provisions of RSA 399-A.

RSA 512:21 (X) - wages of the defendant earned before the service of the writ if the defendant is a married woman and the action is founded upon any loan contract subject to the provisions of RSA 399-A on which her husband is or was at any time an obligor, jointly or severally, contingently or otherwise.

RSA 512:21 (XI) -  money, rights, and credits of the defendant deposited in any account designated as a payroll account.

PERSONALTY

RSA 512:21 (VII)  - Damages recovered for the conversion of property exempt from attachment[lost or stolen property that was exempt].

RSA 511:2(I) 

RSA 511:2 (II)  -[ bedding and cooking]; comfortable beds, bedsteads and bedding necessary for the debtor, the debtor’s spouse and children.

RSA 511:2(III) – household furniture to the value of $3,500.

RSA 511:2(IV)  - [cooking, appliances]; one cook stove, one heating stove and one refrigerator and necessary utensils belongs to the same.

RSA 511:2(V)  - one sewing machine, kept for use by the debtor of the debtor’s family.

RSA 511:2(VI)  - [food and fuel]; provisions and fuel to the value of $400.

RSA 511:2(VII) – the uniform, arms and equipment of every officer and private in the militia.

RSA 511:2 (VIII) – [ bible and books]; the bibles, school books and library of any debtor, used by the debtor or the debtor’s family, to the value of $800.

RSA 511:2(IX) – tools of the debtor’s occupation to the value of $5000.

RSA 511:2(X)  - one hog and one pig, and the pork of the same when slaughtered.

RSA 511:2(XI) – six sheep and the fleeces of same.

RSA 511:2 (XII) – one cow; a yoke of oxen or a horse, when required for farming or teaming purposes or other actual use; and hay not exceeding 4 tons.

RSA 511:2(XIII) – domestic fowls not exceeding $300 in value.

RSA 511;2(XIV) – the debtor’s interest in one pew in any meetinghouse in which the debtor or the debtor’s family usually worship.

RSA 511:2(XV)  -  the debtor’s interest in one lot or right to burial in any cemetery.

RSA 511;2(XVI) – one automobile to the value of $4000.

RSA 511:2(XVII) – jewelry owned by the debtor of the debtor’s family to the value of $500.

RSA 511:2(XVIII) – [“wildcard”] the debtor’s interest in any property, not to exceed $1000 in value, plus up to $7000 of any unused amount of the exemptions provided under paragraphs III, VI, VIII, IX, XVI, and XVII of this section.

TOOLS OF THE TRADE

RSA 511:2 (IX)  -  tools of the debtor’s occupation to the value of $5000.

RSA 522:2 (VII)  - uniforms, arms and equipment of the military.

RSA 511:2 (XII) – one cow; a yoke of oxen or a horse, when required for farming or teaming purposes or other actual use; and hay not exceeding 4 tons.

BUSINESS PROPERTY OF A PARTNERSHIP

RSA 304-A:25(c) Property Rights of a Partner - Nature of Partner’s Right in specific Partnership Property- A partner’s right in specific partnership property is not subject to attachment, trustee process or execution, except on a claim against the partnership.  When partnership property is attached for a partnership debt, the partners, or any of them, or the representatives of a decease partner, cannot claim any right under the homestead exemption laws.

INSURANCE

RSA 512:21 (VIII) -  money, rights, and credits of the defendant in the hands of any insurance company or its agents whenever the same is due on account of the loss of, or damage by fire to, any property which by the laws of this state was exempt from attachment or levy on execution; provided, that whenever  a building or structure so damaged or destroyed was part of the homestead, only so much of the amount due therefore shall be exempt as, together with the value of the part of the homestead remaining, if any shall equal the sum of $5000.

RSA 402:69 firefighters – money due a fireman, or in case of his death his parent, widow or children.

RSA 408:1 Married woman – every policy of life or endowment insurance made payable to or for the benefit of a married woman, or after its issue assigned, transferred, or in any way made payable to a married woman or to any person in trust for her or her benefit, whether procured by herself, her husband, or by any other person and whether the assignment or transfer is made by her husband or by any other person, shall inure to her separate use and benefit, and to that of her children, subject to the provisions of law, relative to premiums paid in fraud to creditors [life insurance or endowment proceeds if beneficiary is a married woman].

RSA 408:2 Third Persons – if a policy of life or endowment insurance is effected by any person on his own life or on another life, in favor of a person other than himself having an insurable interest therein, the lawful beneficiary thereof other than himself or his legal representatives, shall be entitled to its proceeds and all other benefits against creditors and representatives of the person effecting the same; provided, that, subject to the statute of limitations, the amount of any premiums for said insurance paid in fraud of creditors, with interest thereon, shall inure to their benefit from the proceeds of the policy [life insurance or endowment proceeds if you are not the insured].

RSA 418:17 fraternal benefits society, money or benefits paid (does not apply to loans or other obligations owing to the fraternal society from the member or his or her “benefactor”).  See also RSA 418:22.

RSA 512:21(VIII) – money, rights, and credits of the defendant in the hands of any insurance company or its agents whenever the same is due on account of the loss of, or damage by fire to, any property which by the laws of this state was exempt from attachment or levy on execution; provided, that whenever a building or structure so damaged or destroyed was part of the homestead, only so much of the amount due therefore shall be exempt as, together with the value of the part of the homestead remaining, if any, shall equal the sum of $5000. [homeowners insurance proceeds]

38 U.S.C.  §1970(g) – service member’s group life insurance and veteran’s group life insurance made to or on account of an insured or a beneficiary.

RSA 161 –C:11 – Alternative method of support enforcement for dependent children, collection of support debt:

 I. Except as provided in paragraph II of this section, any property otherwise exempt from trustee process, attachment and execution shall be exempt from an order to withhold and deliver, administrative seizure and disposition, and lien and foreclosure.  Insurance settlement payments for casualty loss to personal or real property and past or future medical treatment shall be exempt for this section.  Reasonable attorney fees and expenses related to obtaining the insurance settlement or judgment shall be exempt from this section pursuant to RSA 311:13.

II.  The following amounts shall be exempt from withholding and may be disbursed to the responsible parent whether such earning are paid or to be paid weekly, monthly, or at other regular intervals and whether there be due to the parent earning for one week or for a longer period: (a) If the responsible parent supports a second family, 50 percent of the parent’s disposable earnings; provided, however, the if the arrearage is more than 12 weeks old, 45 percent of the parent’s disposable earnings shall be exempt; (b) If the responsible parent does not support a second family, 40 percent of the parent’s disposable earnings; provide, however, that if the arrearage is more than 12 weeks old, 35 percent of the parent’s disposable earnings shall be exempt.

III.  Any lien or order to withhold and deliver served pursuant to this chapter shall continue to operate and require any person so served to withhold the nonexempt portion of earnings at each succeeding earnings disbursement interval until the entire amount of the support debt stated in the lien or order to withhold and deliver has been withheld.

PUBLIC BENEFITS

RSA 167:25 -  Public assistance, aid to blind, aged, or disabled persons, and to dependent children.

RETIREMENT, PENSION , DEATH, DISABILITY & SURVIVORS BENEFITS

RSA 512:21 (IV) -  any pension or bounty money of the defendant allowed by any law of the United States before it has come into his actual possession.

RSA 511:2(XIX)  -  Subject to the Uniform Fraudulent Transfer Act, RSA 545-A, any interest in a retirement plan or arrangement qualified for tax exemption purposes under present or future acts of Congress; provided, any transfer or rollover contribution between retirement plans shall not be deemed a transfer which is fraudulent as to a creditor under the Uniform Fraudulent Transfer Act. "Retirement plan or arrangement qualified for tax exemption purposes" shall include without limitation, trusts, custodial accounts, insurance, annuity contracts, and other properties and rights constituting a part thereof. By way of example and not by limitation, retirement plans or arrangements qualified for tax exemption purposes permitted under present acts of Congress include defined contribution plans and defined benefit plans as defined under the Internal Revenue Code (IRC), individual retirement accounts including Roth IRAs and education IRAs, individual retirement annuities, simplified employee pension plans, Keogh plans, IRC section 403(a) annuity plans, IRC section 403(b) annuities, and eligible state deferred compensation plans governed under IRC section 457. This paragraph shall be in addition to and not a limitation of any other provision of New Hampshire law which grants an exemption from attachment or execution and every other species of forced sale for the payment of debts. This paragraph shall be effective for retirement plans and arrangements in existence on, or created after January 1, 1999, but shall apply only to extensions of credit made, and debts arising, after January 1, 1999.

RSA 102:23 Firefighters – the payments made by permanent firemen to the retirement board and the benefits or compensation received hereunder shall be exempt from taxation, attachment, and the operation of laws relating to insolvency or bankruptcy.  No assignment of compensation due under this chapter shall be valid unless approved by the board.

RSA 103:18 Police Officers – the payments made by permanent policemen to the board and the benefits or compensation received hereunder shall be exempt from taxation, attachment, and the operation of laws relating to insolvency or bankruptcy.  No assignment of benefits or compensation due hereunder shall be valid unless approved by the board.

RSA 100A:26 Public Officers & Employees – the right of a person to any benefit or to any other right accrued or accruing to any person under the provisions of this chapter, and the monies I the funds created hereby, shall be exempted from any state, county or municipal tax in the state, and shall not be subject to execution, trustee process, attachment or any other process whatsoever, legal or equitable, and shall be un-assignable except as herein specifically provided.

11 U.S.C.  §522 tax exempt retirement accounts,

[See the Federal Code Exemptions, at Section II below, for a full print out of Section 522]

10 U.S.C.  §1440 -  payment of annuities, beneficiaries for military personnel.

5 U.S.C.  §8346  - civil service employee’s retirement.

22 U.S.C.  §4060 -  foreign service employees’ retirement.

45 U.S.C.  §231m  - railroad workers retirement.

42 U.S.C.  §407 social security benefits.

10 U.S.C.  §1450(i)  -  military service

28 U.S.C.  §376(n) - judiciary

33 U.S.C.  §775 - lighthouse workers

5 U.S.C.  §8130 -  US government employees (work injuries)

33 U.S.C. § 916 -  longshoremen, harbor workers (work injuries); [See also 42 U.S.C.  §1651 for persons employed at military, air or naval bases outside of the US].

42 U.S.C. § 1717 – compensation for injury, death or detention of employees of contractors with the US outside  of the US.

38 U.S.C.  § 5301 – veteran’s benefits

MISC.

10 U.S.C.  §1035 military deposits to savings accounts while on permanent duty outside the US.

15 U.S.C. § 1673 – Restrictions on garnishment.

25 U.S.C.  §410 -  proceeds from sale or lease of Indian lands.

25 U.S.C. §543 and §545 -  disposition of tribal funds, Klamath Indians.

46 U.S.C. § 11110 -  seamen’s clothing.

CHILD SUPPORT.

RSA 161–C:11 – Alternative method of support enforcement for dependent children, collection of support debt:

 I. Except as provided in paragraph II of this section, any property otherwise exempt from trustee process, attachment and execution shall be exempt from an order to withhold and deliver, administrative seizure and disposition, and lien and foreclosure.  Insurance settlement payments for casualty loss to personal or real property and past or future medical treatment shall be exempt for this section.  Reasonable attorney fees and expenses related to obtaining the insurance settlement or judgment shall be exempt from this section pursuant to RSA 311:13.

II.  The following amounts shall be exempt from withholding and may be disbursed to the responsible parent whether such earning are paid or to be paid weekly, monthly, or at other regular intervals and whether there be due to the parent earning for one week or for a longer period: (a) If the responsible parent supports a second family, 50 percent of the parent’s disposable earnings; provided, however, the if the arrearage is more than 12 weeks old, 45 percent of the parent’s disposable earnings shall be exempt; (b) If the responsible parent does not support a second family, 40 percent of the parent’s disposable earnings; provide, however, that if the arrearage is more than 12 weeks old, 35 percent of the parent’s disposable earnings shall be exempt.

III.  Any lien or order to withhold and deliver served pursuant to this chapter shall continue to operate and require any person so served to withhold the nonexempt portion of earnings at each succeeding earnings disbursement interval until the entire amount of the support debt stated in the lien or order to withhold and deliver has been withheld.