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What property may I keep in a Chapter 13 bankruptcy?

Chapter 13 bankruptcies offer those who qualify for them many more flexibilities than other forms of bankruptcy, but most American's don't necessarily understand the difference between the two. When most people throughout the country think about bankruptcy or talk about it publicly, they often actually describe a Chapter 7 liquidation bankruptcy. Under that system, a person who cannot pay his or her debts forfeits property that does not qualify for exemption. A trustee then sells the property to make back some of the value of the debts before discharging much or all of the remaining debt.

In contrast, Chapter 13 bankruptcy offers a repayment plan structure to individuals who have sufficient income to still repay debts, but need some help reorganizing debt and relief from collection tactics.

In a best case scenario, those who qualify for Chapter 13 may not lose any property, if they properly abide with the repayment plan. Depending on the type of debt that you carry and your income, you may actually qualify for a Chapter 13 plan, so don't move forward with either form of bankruptcy until you understand all of your options fully.

Understanding exactly which bankruptcy may work ideally for your needs is easiest with the guidance of an experienced bankruptcy attorney who can help you walk through the entire process. Professional legal counsel helps ensure that you stay on track to the end, while identifying benefits you might otherwise miss and protecting your rights along the way.

So, I can keep all my property in Chapter 13?

Theoretically, it is possible to undergo a Chapter 13 bankruptcy without losing any property. The primary issues at stake in Chapter 13 proceedings are not the amount of property that an individual has or its value. Instead, the focus is on the value of the debt the individual carries in relation to his or her income.

If you have sufficient income to repay your debts over a period that typically last three to five years, then you may actually keep all your property. That does not mean that Chapter 13 bankruptcies are a walk in the park, however — they require the debtor to make payments according to a very strict plan. If you choose to use Chapter 13, then you must focus all your attention on completing the plan properly to enjoy the benefits and avoid nasty penalties.

Is it legal to represent myself?

In general, it is legal to represent yourself in a bankruptcy — however, it is rarely wise. If a person represents him- or herself in a bankruptcy and does not properly understand the intricacies of the process, disaster is likely.

Bankruptcies offer tremendous relief, but also leave little room for sloppy execution. It is far wiser to consult with an experienced attorney who can help you understand which types of bankruptcy you have available and enlist his or her help, to avoid common pitfalls along the way.

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