Many people are under the mistaken belief that you have to give up your home, your car, and other belongings when you file bankruptcy. They are misinformed that they have to give up all of their assets. This is not at all the case. The contrary is true. Others are uncertain about that happens to your belongings when you file bankruptcy. You may be wondering, “can I keep my home if I file bankruptcy?” or “can I keep my car if I file bankruptcy?”
You’ll be glad to know that, in most cases, you will keep your home, car, personal effects, and other assets and belongings. You are not expected to give up the shirt off your back. In fact, both the Federal law and California law specifically provides for what property you keep when your case is filed with the Court, by giving you a set of exemptions. Exemptions, in the most simple terms, refer to the amount of “stuff” that you are allowed to keep. For example, you can have a car worth a certain amount, a home with a limited and specified amount of equity, money in a retirement account, a certain amount of jewelry, and other items.
You see, the Courts don’t expect you to give up everything. That would not give you a real chance of starting over. The Courts don't expect you to become homeless either, nor do they expect you to give up your car and use public transportation, unless that is by choice. If you had to give up everything, it would be very hard for you to truly get a fresh start. To help you get a fresh start, you can keep your home, car, and other assets and belongings, up to your exemption limits.
So if you need to file bankruptcy, you don’t necessarily need to fret about losing your home, car, or your other belongings. Instead, talk to a lawyer and list out all of your assets and belongings and their value. Let your lawyer determine whether your assets are protected by your allowable exemptions. If they are- and in most cases they will be- you get to keep your belongings when you file for bankruptcy.