One of the biggest fears when it comes to the subject of bankruptcy is losing assets. Many people work hard for the things they own, and having to give up personal possessions can be a gutting experience. That said, bankruptcy does not mean you have to give everything up, as a bankruptcy lawyer, like from Chorches Bankruptcy Law, can explain. Similarly, it does not mean you cannot own a home or vehicle. What happens to your assets can depend on several factors, but in general, you can expect to keep a reasonable amount of your belongings up to a certain value. To better understand the different scenarios that can happen to your assets during bankruptcy, consider these three situations.
Often, You Can Keep Many Assets
If you have been listening to some of the common myths about bankruptcy, it may surprise you to hear that you can keep many of your assets when you file. Although the court will not allow you to have possessions of unreasonably high value, you should be able to keep enough to start over with. To ensure this is possible, the law allows for property exemptions. Essentially, these are categories of different things you may keep. Note that each category has a value limit. For example, your car cannot be worth more than $4,000.
Some common exemptions include:
- Your home
- Retirement plans
When you file for bankruptcy, there are two sets of laws you will need to consider. State laws often differ from federal laws for exemptions. Check to see which exemptions apply to you and which route might be better for your situation.
Sometimes, You Can Keep All Assets
With Chapter 13, the trustee works with creditors and debtors to restructure debts into a three to five year repayment plan. By going this route, consumers can often reduce their debts. Another big advantage of Chapter 13 is the fact that it usually allows you to keep your belongings. Because you are committing to repayment, the court sees no need to sell off your property.
Sometimes, You Have to Give Up Assets
When you file for Chapter 7, you will have to give up any property that you cannot cover with an exemption. With this route, the court eliminates your debts, and in exchange, you liquidate any surplus assets to try to pay your creditors back with.
If you have questions about what will happen to your property during bankruptcy, you can work with an experienced attorney for further clarification. Remember, there is no need to panic. You will be able to keep at least some of your property.