There are many bankruptcy misconceptions regarding the filing of bankruptcy.  One of the more common misconceptions is that you cannot keep your home or car if you file bankruptcy.  In most instances, you should be able to keep your house or car when filing bankruptcy.  When people file bankruptcy, they disclose all of their assets in their bankruptcy petition.  Some of the assets that are typically disclosed are your ownership interest in your home and your automobile.  Each state then allows debtors certain exempt (or protected) assets in which the Trustee and creditors cannot attack.  Fro example, In Indiana an individual debtor is entitled to $17,600.00 equity in their homestead.  Therefore, if an individual owns a home in Indiana and has $17,600.00 equity or less in their home, then it is safe and they will not lose their home.  Equity is the difference in the value of the home less the balance of any liens or encumbrances on the real estate.  In most instances if you have a mortgage on your home and are current on your payments to the mortgage company, you can retain your home in a Chapter 7.

In regards to automobiles, that is personal property that is disclosed in your bankruptcy petition.  Each state allows for various amounts of personal property exemptions.  Indiana allows a total of $9,350.00 per debtor for personal property exemptions.  This includes items such as clothing, furniture, automobiles, jewelry and the like.  So long as all of those assets, including your car, total less than $9,350.00 per individual debtor, then your car is typically safe.   Again, the amount of your asset is the equity in your automobile.  This would be the value of the vehicle less the car loan balance.  As with mortgages, as long as you are current on your car payment, you can typically  keep your automobile in a Chapter 7 bankruptcy.

In a Chapter 13 bankruptcy, the same exemption amounts apply for a home and car, but an experienced Chapter 13 bankruptcy attorney can assist you in keeping a house and car if you are behind.  Even homes that are in foreclosure can be saved with a proper Chapter 13 petition.  Even automobiles that have been repossessed, but not yet sold at auction, can be retained in a proper Chapter 13 bankruptcy filing.

Another misconception is that you cannot get any credit in the future once you file bankruptcy.  Filing bankruptcy can temporarily affect your credit.  However, many forget to consider the fact that their credit may already be suffering considering the financial situation that they are currently in.  For individuals in this situation, bankruptcy might be the best way to eventually rebuild credit and get back on their feet.  Credit won=t drastically improve immediately after filing bankruptcy, so it is important to be patient.  However, after debts are discharged in a Chapter 7 bankruptcy or reorganized in a Chapter 13 bankruptcy, you will probably start getting credit offers again.  Other actions like paying your bills on time will also improve your credit worthiness.  Also, after filing bankruptcy, many former debtors have been able to purchase homes.  In typical cases, people are eligible to seek home mortgages for the purchase of a home two years after receiving a discharge in a Chapter 7 bankruptcy and one year after receiving a Chapter 13 bankruptcy Discharge.  It is suggested that when seeking to obtain a new home loan, you speak to a knowledgeable mortgage or loan assistant who is familiar with the bankruptcy process and has helped others that have filed bankruptcy purchase a home.

Another misconception in bankruptcy is that you can include some creditors and exclude others.  When you file bankruptcy, you are signing a petition, under oath, that these are all the creditors that you have.  Thus, it is your legal obligation to list all creditors and therefore no creditors can be excluded.  This means listing your mortgage and car loans, but an experienced bankruptcy attorney can help you retain those items and reaffirm, if applicable, your obligation under any mortgage or car loan.  Additionally, it should be noted that most credit card companies periodically check credit reports.  Thus, if you fail to list a card in the hopes of using that card in the future, the likely result is that the credit card company will see that you have filed bankruptcy and cancel the card.

Finally, another misconception regarding bankruptcy is that your employer can terminate you for filing bankruptcy.  No employer may fire you because you filed for bankruptcy.  Federal law precludes employers from discriminating against you because of your financial condition and because you filed for bankruptcy.  In a typical case, your employer will not be notified of you filing bankruptcy.  As always, consult your bankruptcy attorney to obtain further advisement that filing bankruptcy may have on your job.

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