If you have an asset with a value that exceeds what can be protected by bankruptcy exemptions you may still keep the asset if you can afford to pay the equivalent value of the asset in a plan of reorganization. Chapter 13 assets can be protected. Below is a simplistic example of how an asset can be protected when filing a Chapter 13 bankruptcy. This process can be far more complicated than this example.
For Example:
One of the most common high value assets some of our clients have are multiple vehicles that are all paid in full. If the value of all the vehicles is $36,000 there is no way each vehicle can be exempted or protected. In a chapter 13 bankruptcy you may keep the asset and pay your creditors in the plan of reorganization what cannot be protected.
Vehicles worth: $36,000
Exemptions Applied: $17,500
Amount Unprotected: $18,500
To keep the vehicles you will have to pay your creditors the $18,500 over three to five years in the plan of reorganization. One of the problems is that you most likely are having some financial difficulty or you would not be seeking bankruptcy help. The question will be if you can afford to make the monthly chapter 13 plan payments to keep the vehicles.
Estimated Monthly Chapter 13 Plan Payment
$18,500/60 months = $308.33 per month
Chapter 13 Trustee Fee = $32.00 per month
Remainder of Attorney Fees = $50.00 per month
Total $390.33 per month for 60 months
The example above is assuming a number of things. First, that you want to keep all of the vehicles and you have significant unsecured debt that far exceeds the $18,500 paid back in the plan of reorganization. Upon completion of the plan the debt that you do not or cannot afford to pay back is discharged just like in a Chapter 7 bankruptcy.
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