The simplest answer is that a bankruptcy eliminates most, if not all, of what are known as ‘unsecured’ debts. These include any credit cards, lines of credit, personal loans, payday loans and income tax debt. When you file for bankruptcy, you will no longer have to worry about repaying these debts.

Does bankruptcy take your belongings?

In many Chapter 7 bankruptcies, the filer can claim all property as exempt, and the trustee takes nothing. But, even so, everything you own must be listed in your bankruptcy schedules. (Learn more about the information you’ll disclose when completing the bankruptcy forms.)

What happens to a title loan when you file bankruptcy?

If the creditor already has a deficiency judgment, then the bankruptcy will discharge it. If you are filing under Chapter 13 bankruptcy, then you may be able to change the terms of a title loan. In Chapter 13, you can lower the principal balance of the loan to the value of the vehicle, and lower the interest rate to market rate

What kind of bankruptcy do I need to file?

There is more than one process whereby you can file for a bankruptcy. The two types people most favor are Chapter 7 bankruptcy and Chapter 13 bankruptcy. A chapter 7 bankruptcy enables you to legally discharge, or no longer be liable for, most debt that you owed as of the date you filed for the bankruptcy.

Do you have to give up everything in bankruptcy?

No one gives up everything own in bankruptcy. You can save (exempt) items you’ll need to work and live using bankruptcy exemptions. A Chapter 7 debtor gives up nonexempt property—the trustee liquidates unprotected property for creditors—but not a Chapter 13 filer.

What happens to my car when I file bankruptcy?

If you file for Chapter 7 bankruptcy and local bankruptcy laws allow you to exempt all of the equity you have in your car, you can keep the vehicle—as long as you’re current on your loan payments. And if the market value of a vehicle you own outright is less than the exemption amount, you’re in the clear.