In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt and you make your mortgage/car loan payments. Even if your property is not fully exempt, you will be able to keep it if you pay its non-exempt value to creditors in chapter 13. However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property during or after the bankruptcy case.
There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. In a chapter 7, you can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the fair market value that the property you want to keep is worth (This can be a major savings for cars as it allows you to pay the Blue Book value rather than the loan value). In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
