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St Louis Bankruptcy: What Are The Chances That I Would Lose My House Or Car In A Bankruptcy?

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The chances of you losing a major asset such as a house or a car in a St Louis bankruptcy depend on a number of factors. But a good attorney knows how to avoid such an outcome. An experienced lawyer is going to understand the types of situations in which such a thing could happen. And a firm that knows all the pitfalls of the bankruptcy world will make sure that you do not lose a thing when you file.

To begin with, the only time you would really stand to lose an asset is in a St Louis Chapter 7. This type of bankruptcy is described as a liquidation / discharge. The discharge side of the equation is pretty straightforward. All of your unsecured debts (like credit cards, medical bills, payday loans, etc.) are knocked out forever (you’ll never again have to worry about those debts, because the federal government will discharge them).

The liquidation part is a little more tricky (or at least there are certain situations in which it can turn tricky). The best way to explain the liquidation side of a Chapter 7 is explain it from the Bankruptcy Trustee’s point of view. The Trustee is an individual hired by the government to examine your bankruptcy estate. His/her main job is to figure out if you have any assets that he/she can sell on the open market (and then divvy out the proceeds to your unsecured creditors).

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So if you have a car that has a lot of equity in it (that cannot be protected by any exemptions that your St Louis bankruptcy lawyer would use on your behalf), then there is a good chance that the Trustee would want to take the car, sell it, then divide the profit from the sale between your creditors.

Let’s look at a specific example: You own a 2012 Toyota Camry that is paid in full (i.e. there is no outstanding balance owed on the car). The fair market value of such a vehicle is about $13,000. If you file a Ch7, you can a $3,000 exemption from the government to cover any equity, and a $600 wildcard exemption that can be applied to anything (which means you have at least $3,600 to apply towards the car). But even if you apply the 3600 towards the car, that still leaves $9,400 of un-exempt equity (13,000 – 3,600 = 9,400). And $9,400 of equity in a car is more than enough for the Trustee to go after.

But of course, most newer cars are financed with a loan attached to them, so the above problem does not normally arise. For instance, most 2012 Toyota Camrys are not paid-in-full; most of them are being financed with a loan attached to it. So let’s say your 2012 Toyota Camry still has an outstanding loan balance of $14,000 (for which you make monthly payments on). The fair market value is still $13,000. But in this example, you are upside down (in other words, you owe more than the car is worth). Which means there is no equity at all (and therefore nothing that the Trustee can go after). In this kind of situation, you would just continue to make your regular monthly payments to the finance company (and keep your car).

The affordable St. Louis bankruptcy attorneys at Brinkman & Alter, LLC have been saving and protecting people’s assets for years. Our goal is to make sure that you keep the assets and property you want, discharge the debts that you want to get rid of, and do it all at an affordable cost to you. All phone conversations and office consultations are free of charge.