One of the biggest myths in bankruptcy, often perpetuated by the credit card companies, is that you lose all your assets once you file for bankruptcy. They try to scare you from doing bankruptcy and look for debt relief options. For the most part, you can keep all your assets.

Chapter 7 Bankruptcy

In chapter 7 bankruptcy, there are federal laws that provided exemption amounts for each type of your personal and real properties owned by you. This means that you can protect your properties up to a certain dollar amount. For example, if you have equity in your house, you can exempt up to $21,625, if your spouse’s name is mentioned in the deed, then the amount gets doubled to $43,250. equity means the value of your house minus the value of any liens like mortgage, home equity line, tax liens. If there is no equity in your house, then you can use up to $10,825 of the unused equity in your home for other assets.

In addition to this, there is exemption on the dollar amount on your personal properties like cars, household goods, clothing, jewelry, life insurance policies and any other thing that you own. Your creditors cannot touch your retirement account.

The exemption planning in chapter 7 bankruptcy is a very tricky process. You must consult an experienced bankruptcy attorney in this regard. Many people try to file for bankruptcy on their own, but they end up messing their exemption planning, and are grilled and harassed by the trustee at their 341 meeting. The trustee may also file a motion to dismiss their case or even worse, will seize the debtors assets.

If you are considering chapter 7 bankruptcy, research for an experienced bankruptcy attorney who has years of experience in exemption planning. They will discuss about what you own and help you value your stuff and protect it during your bankruptcy process.

Helpful Resources:

http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspx

This entry was posted on Wednesday, May 1st, 2013 at 7:03 pm and is filed under Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.