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If you have assets that cannot be protected by the California bankruptcy exemptions that does not mean you have to give the up. If you have enough income to fund a Chapter 13 plan and pay the equivalent value of those assets to your creditors in the Chapter 13 plan you can keep the assets.
- You own two cars that are both paid in full
- Car #1 is worth $14,000; Car #2 is worth $20,000
- You have $5,000 in your bank accounts
- Total $39,000
- Bankruptcy exemptions can only protect approx. $27,000 of the $39,000
- $12,000 of your assets are not protected
- To keep all of your assets you will have to pay the equivalent, approx. $12,000 over three to five years depending upon the length of your Chapter 13 plan
- If the plan is 36 months, the monthly payment would be approx. $333
- If the plan is 60 months, the monthly payment would be approx. $200
The most common reason that assets cannot be protected when filing bankruptcy is when a large amount of equity in a house must be protected to keep the house. The set of exemptions that will protect the house usually does not protect bank account money or all of your vehicles. The catch is that you have to be able to make the monthly Chapter 13 plan payment each month. If you do not have the income to do that each month, then filing a Chapter 7 case and just giving something up or settling with the Chapter 7 trustee could be the best thing to do.
You do not always have to file a Chapter 13 bankruptcy to keep assets that cannot be protected. You may still file a Chapter 7 bankruptcy case and negotiate with the Chapter 7 trustee to settle with the bankruptcy estate.