Can I Keep My Boat in a Chapter 13?

Chapter 13 Generally

A Chapter 13 is a type of bankruptcy case that involves a repayment plan. Chapter 13 cases last from three years to five years; if you file a Chapter 13, you make payments every month to a trustee, who uses the money to pay your creditors. Chapter 13 bankruptcy has many benefits, but in exchange for those benefits, you must commit all your disposable income to the plan.

Your Chapter 13 plan payment is based on a variety of factors, but basically, you must pay your disposable income. Your disposable income is the income you have leftover after you pay all your reasonable and necessary expenses. Reasonable and necessary expenses include rent, mortgages, reasonable car payments, gas, utilities, food, clothing, personal care, pet care, child care, property taxes, income taxes, child support, alimony, retirement savings and charitable contributions. Luxury expenses such as private school tuition, motorcycle and boat payments, salon treatments and extracurricular activities are generally not permitted in your budget.

For example, if your monthly income after taxes is $3,000, the court will allow you to subtract the reasonable and necessary expenses listed above. If those expenses total $2,300, your Chapter 13 plan payment will be $700. If you have expenses beyond that $2,300 that you want to maintain, the court will still make you pay $700 into your Chapter 13.

If you still owe money on your boat, the court is unlikely to allow you to keep making the payments, because the court will want that money to go to other creditors. The trustee or another creditor might try to force you to surrender the boat unless you pay every creditor in full in addition to paying on the boat, which can be very difficult if you have a lot of debt.

If your boat is paid in full, you can certainly keep it in a Chapter 13 case. Chapter 13 bankruptcies are designed to help people protect their property that they might lose in a Chapter 7 case. If your boat is very valuable, you may have to pay extra into your Chapter 13 plan, but you can keep it.