• Jovanna Bearden

What is Equity?

When you are planning on filing a bankruptcy, a question your attorney is going to talk to you about is the equity you have in your property.


What is equity?


Equity is the amount of your interest in a piece of property. You determine it by finding out the value of the property and subtracting the amount of the loan against the property.


So for example, let’s say the value of your vehicle is $10,000 and your car loan is $4,000. $10,000 - $4,000 = $6,000. That means your equity in the vehicle is $6,000.


How do you find the value of your property?


A good place to start when valuing your property is the internet! For a home value you can start with Zillow.com. For a vehicle value you can start with KBB.com.


So why does this matter when filing a bankruptcy?


Bankruptcy is all about giving you a fresh start. To do that, every state has written laws that set out how much equity you can have in various types of assets - from your home and vehicle to your personal belongings and bank accounts. These laws are called exemptions. Missouri's exemptions can be found here, and I'll be working on going through all of them in blog posts. In the meantime, contact me if you have a question about an exemption or your property!


When deciding if bankruptcy is a good fit for you, it is important to review these exemptions with your attorney and make sure all of your equity is protected. If it isn’t protected in the bankruptcy, you need to know what the likely outcome of filing a Chapter 7 versus a Chapter 13 would be, so you can make a decision about whether to file a bankruptcy or not.


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