Keep and pay

‘Keep and pay’ is a bankruptcy strategy that allows people to keep certain assets even after having filed bankruptcy, given that the person continues paying for them. 

When a person finds themselves unable to repay their existing debts, they have the option to initiate a bankruptcy filing. This legal process provides relief by releasing the individual from their dischargeable debts, although creditors still have the chance to partially recover the value of the loans. The person’s assets will undergo assessment and liquidation to generate funds that can be used to repay the creditors.

In the United States, individuals who possess limited assets often opt for bankruptcy which enables the filer to keep specific categories of assets, including personal belongings, clothing, household furniture, essential tools for work, and specific agricultural properties. These assets are commonly referred to as exempt assets.

In order to retain specific assets during bankruptcy proceedings, individuals have the option to submit keep-and-pay statements, demonstrating their intention to keep those assets. These statements typically include plans outlining how they intend to make future payments for the assets. These assets, designated as exemptions, are protected and can be retained during the bankruptcy process. However, any non-exempt assets will be liquidated by the court to generate funds for repaying creditors.