You can keep a lot of personal belongings when you file bankruptcy, provided that you have an exemption available to protect them. In Chicago, Illinois, an individual debtor can keep up to $4000 of cash and personal belongings. Good news! Your stuff probably isn’t worth that much. It’s old, it’s used, the kids have tore them up…etc. Think garage sale value.
K is also for Keeping Debt. A debtor can reaffirm a secured debt if they can demonstrate the ability to afford the monthly payments and by signing a reaffirmation agreements. Most commonly, this is done for cars and homes.
Interesting story. I had a Chicago Chapter 7 trustee tell a debtor of mine to walk away from his home. Debtor looked shocked at how serious the trustee was. Then I looked at the numbers. The home was recently valued at $71,000 from a recent appraisal in this current market. The debtor owed about $140,000, but was current on the loan. When asked why he would want to pay double what something was worth, the only thing he could say was “but it is my home.” This is a great dilemma I see. Debtors come in, pleading to keep their homes, but want to get rid of all their other debt. Truth be told, paying twice what something is worth could be the reason they are filing bankruptcy in the first place. True, the economy and poor real estate market decimated values in Chicago, in Illinois and around the country.
The trustee is right, no matter how attached he was to his home. It sucks, but it is true. The bankrupt debtor should walk away and get a complete fresh start. I