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What Happens to My Cellphone When I File for Bankruptcy?

What Happens to My Cellphone When I File for Bankruptcy?

Cellphones have become one of the most essential items we carry, just like a wallet, purse, or set of keys. Without our phones, performing tasks throughout the day, including work-related duties. 

In the distant past, bankruptcy courts used to consider cellphones as luxury items because they were not as common as it is today. Now, most people do not have landlines, which means you can keep your cellphone during your bankruptcy proceedings. 

When you file your bankruptcy petition, you must disclose all monthly expenses, including executory contacts like your cellphone contract, mortgage or lease agreement, etc. Remember, you have the right to exempt a certain amount of your assets, including electronics such as your cellphone or laptop, as long as you research your phone’s fair market value as of right now, rather than when you first purchased it. 

The following is a breakdown of how exemptions work in Chapter 7 and Chapter 13 bankruptcy: 

  • Chapter 7 bankruptcy – The bankruptcy trustee in charge of overseeing your case is also tasked to sell any nonexempt property. Fortunately, most exemptions cover all household goods and electronics, which include cellphones. Additionally, a Chapter 7 trustee is often not interested in selling your cellphone because it loses significant value after purchase. 

  • Chapter 13 bankruptcy – You can keep all nonexempt property in Chapter 13, if you pay its value through a three- to five-year repayment plan. 

However, if you do not want to keep your cellphone contract, there is a provision in the bankruptcy code that enables you to reject the contract as part of your proceedings. Therefore, any owed payments on the contract will be discharged – or wiped away. This could give you an opportunity to purchase a cheaper phone and obtain a more cost-effective contract. 

If you are interested in filing for bankruptcy in Northridge, IL, contact Bach Law Offices, Inc. today at (847) 448-0025 to let us examine your financial situation. Get more than 40 years of combined legal experience on your side! 


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