Posted on March 27th, 2023

Are you considering filing for bankruptcy but concerned about what will happen to your assets? It's a common worry, and one that we hear frequently at Sidney Mickell, Attorney at Law. In this blog post, we'll take a closer look at bankruptcy and how it can affect your assets. We'll cover what assets you can keep, what you might lose, and what steps you can take to protect your assets.

Understanding Bankruptcy

Before we dive into what assets you can keep and what you might lose, let's first talk about bankruptcy itself. Bankruptcy is a legal process that allows individuals and businesses to eliminate or restructure their debts. There are different types of bankruptcy, but the most common types for individuals are Chapter 7 and Chapter 13.

Chapter 7 bankruptcy involves the liquidation of non-exempt assets to pay off debts, while Chapter 13 bankruptcy involves the repayment of debts over a period of three to five years. Both types of bankruptcy have their own rules and requirements when it comes to assets, and it's important to understand these rules before filing.

What Assets You Can Keep

The good news is that bankruptcy doesn't necessarily mean that you will lose all of your assets. In fact, there are several types of assets that are exempt from bankruptcy proceedings. These assets are protected and you can keep them even after filing for bankruptcy.

Some common exempt assets include:

• Your primary residence, up to a certain value
• Retirement accounts, such as 401(k)s and IRAs
• Personal property, such as clothing, furniture, and household goods
• Tools of the trade, such as tools and equipment used for work
• Public benefits, such as Social Security and unemployment benefits

It's important to note that each state has its own exemption laws, so the specific assets that are exempt may vary depending on where you live. An experienced bankruptcy attorney can help you understand the exemption laws in your state and protect your assets.

What Assets You Might Lose

While there are many assets that are exempt from bankruptcy, there are also assets that are not protected and can be used to pay off your debts. These non-exempt assets can vary depending on the type of bankruptcy you file and the laws in your state.

Some common non-exempt assets include:

• Second homes or investment properties
• Luxury vehicles
• Expensive jewelry or artwork
• Bank accounts with significant balances
• Stocks, bonds, and other investments

It's important to note that even if an asset is not exempt, it doesn't necessarily mean that you will lose it. Depending on the value of the asset and the amount of debt you owe, you may be able to negotiate a payment plan or other arrangement to keep the asset.

Protecting Your Assets

If you're concerned about losing your assets in bankruptcy, there are several steps you can take to protect them. One of the most important steps is to work with an experienced bankruptcy attorney who can help you understand your rights and protect your assets.

Another option is to use exemptions to protect your assets. For example, if you have a significant amount of equity in your home, you may be able to use the homestead exemption to protect it. Similarly, if you have a significant amount of money in a retirement account, you may be able to use the retirement account exemption to protect it.

Planning Ahead

One of the best ways to protect your assets in bankruptcy is to plan ahead. If you're considering bankruptcy, it's important to work with an attorney to evaluate your financial situation and develop a strategy that maximizes your exemptions and protects your assets.

It's also important to avoid actions that could be seen as fraudulent or that could jeopardize your bankruptcy case. For example, you should avoid transferring assets or selling them below market value in an attempt to hide them from creditors or the bankruptcy court. These actions can lead to your bankruptcy case being dismissed, fines, or even criminal charges.

The Role of a Bankruptcy Trustee

In both Chapter 7 and Chapter 13 bankruptcy cases, a bankruptcy trustee is appointed to oversee the process. The trustee's role is to evaluate your assets and debts, administer the bankruptcy estate, and ensure that creditors are paid as much as possible.

The trustee will review your assets and determine which assets are exempt and which are non-exempt. If you have non-exempt assets, the trustee will sell them and distribute the proceeds to your creditors. If you have exempt assets, the trustee will not sell them, and you will be able to keep them.

Reaffirming Debts

In some cases, you may be able to keep a secured asset, such as a car or home, by reaffirming the debt. Reaffirming a debt means that you agree to continue making payments on the asset and that the debt is not discharged in bankruptcy.

Reaffirming a debt can be a good option if you want to keep the asset and can afford to make the payments. However, it's important to understand that if you reaffirm a debt and later default on the payments, you could still lose the asset.

Getting Help

Navigating the bankruptcy process can be complex, and it's important to work with an experienced bankruptcy attorney who can help you protect your assets and achieve a fresh financial start. At Sidney Mickell, Attorney at Law, we have the knowledge and experience to guide you through the bankruptcy process and help you understand your rights and options.

Whether you're considering Chapter 7 or Chapter 13 bankruptcy, we can help you evaluate your financial situation, maximize your exemptions, and protect your assets. Contact us today to schedule a consultation and learn more about how we can help.

In conclusion, bankruptcy can be a powerful tool for eliminating or restructuring your debts and achieving a fresh financial start. While bankruptcy may involve the loss of some assets, many assets are exempt from bankruptcy proceedings, and there are steps you can take to protect your assets.

If you're considering bankruptcy, it's important to work with an experienced bankruptcy attorney who can help you understand your rights, maximize your exemptions, and protect your assets. Contact Sidney Mickell, Attorney at Law, today to schedule a consultation and take the first step towards a fresh financial start. You can reach us at (132) 3309 1137 or [email protected].