Will I Have to Give Up or Sell all my Property? Can I keep my House, Car or Apartment?
You can retain property through a bankruptcy proceeding. In a chapter 13 case, you can keep nearly any property you like, although some more easily than others. In a chapter 7 case, you can keep all property designated as “exempt” from creditors. Since time immemorial, local state law has identified certain specific property that, as a matter of public policy, creditors ought not to be able to seize to pay for debts.
A home and tools of the trade are among the items typically “exempted” from the reach of creditors. State law “exemptions” remain in effect to this day, in various forms and differing from state to state.
In Massachusetts (unlike most of the nation), we are fortunate that the exemption for a home has kept pace with housing costs, and if properly declared and filed, an individual may exempt as much as $500,000 of the value of their home. For practical purposes, this does not prevent a mortgage holder from selling a home to satisfy the mortgaged debt. But it means that, without a mortgage, a creditor cannot seize an exempted home and sell it, unless its value free and clear is greater than $500,000.
The Bankruptcy Code provides its own set of exemptions, and an individual must choose between either the state or the available federal exemptions, but not both. A qualified attorney can help you understand the choices.