My husband and I are going to file bankruptcy. I live in North Carolina I have assets totalling about 4000 I have a Rooms To Go acct 4200 and a Ashley furniture acct 3300. Can we keept the furniture?

Answer 1

If the furniture does NOT serve as collateral for one of the loans to Rooms to Go or Ashley, then those loans are unsecured and you can keep the furniture assuming it is claimed as exempt on Schedule C of your bankruptcy petition. If the furniture DOES serve as collateral for the loans to Rooms to Go or Ashley, generally you have to do one of three things in a Chapter 7 case: either reaffirm the debt, surrender the collateral, or redeem the collateral. "Reaffirm" means you sign an agreement (called a reaffirmation agreement) which puts you back on the hook legally for the debt in return for keeping the collateral (in this case, the furniture). So, you would continue regular payments until the furniture is paid off. This is basically the same as if you never filed bankruptcy on the debt. If you "surrender" the collateral, the debt is wiped out but the creditor may repossess the furniture, but they can not sue you for any deficiency balance left due on the loan. You give them back the furniture and the debt goes away entirely. Many people choose to surrender since most furniture creditors never bother to repossess the furniture, so you may end up getting the furniture for free (but if they do show up to repo you have to give it to them). Finally, if you "redeem" the property, you file a Motion to Redeem with the bankruptcy court, and the court will allow you to pay a one-time lump sum payment to the creditor of whatever the collateral is worth and you keep the furniture and the rest of the debt is wiped out. Say you owe $5,000 on furniture which has a current market value (in its used condition) of $2,000.00. If you redeem the furniture, the court would order the creditor to accept a one-time payment from you of $2,000, and the remaining $3,000 balance would be wiped out and you would keep the furniture. This only works on household items, not commerical or business collateral. Also, the one time payment usually has to be paid soon, like within 30 days. Talk about these options with your attorney. Please note that nothing in this posting or in any other posting constitutes legal advice; this is simply my understanding of the facts and law, which I do not warrant, and I am not suggesting any course of action or inaction to any person. Speak to a lawyer for specific advice. If you have any questions, please refer to a lawyer in your jurisdiction. Thanks!