A bankruptcy is a protection from creditors. In a Chapter 13 bankruptcy, you make a plan to repay your debts over a longer period of time. You get to keep all of your property. A Chapter 7 bankruptcy is a little different. You are stating that you do not have the means to repay your debts. A bankruptcy trustee is appointed to manage your estate. The trustee has the power to sell your assets to repay your creditors. The good news is that with a Chapter 7 bankruptcy, you get the option to start over without debts. Even better, you may even get to keep some of your property. Here’s what to know.
Some Property Is Exempt From the Bankruptcy
Bankruptcy law allows for some of your property to be “exempt” from the bankruptcy. Generally speaking, property that is exempt are things that are necessary for living and working. Your bankruptcy is supposed to help you get out from crushing debt, not put you into a situation where you are crushed. You are allowed to keep your necessary household goods and furniture, your clothing, pensions and tools of your trade, up to a certain value. You may even be able to keep some equity in your home and your motor vehicles. Each state places a limit on the amounts, so the amount you get to keep depends on where you live. Non-exempt property would include heirlooms, stocks, bonds, a vacation home or a second car.
Keep in mind that in your bankruptcy, if you owe money on your car or home, you still have to make payments to keep the asset, if it is exempt. The trustee could require you to sell your home or car to have a more affordable payment. It would depend on how much equity you own and the resale value of the car or house.
Listing Property on a Bankruptcy
In your bankruptcy, you submit a list of your assets to the bankruptcy court. Although your property may be exempt from the bankruptcy, you are required to list all of your assets. Failure to do so could be construed as fraud, which would nullify your bankruptcy.
Every state has its own rules concerning bankruptcy property. It’s a good idea to discuss your options with a top Chapter 7 bankruptcy lawyer such as Kamper & Estrada, PLLC to determine the best steps for your situation. Make an appointment today with an attorney who can help you through the process.