Can I Keep My Property If I File for Chapter 7 Bankruptcy?
This is a question asked most often by people considering Chapter 7 bankruptcy.
As we mentioned in How to Discharge Debt through a Chapter 7 Bankruptcy, Chapter 7 bankruptcy is the most straightforward chapter in which general unsecured debts that you can’t pay back are discharged, or wiped out, and you get a chance to start over debt free.
This seems too good to be true and people expect that they have to give up most of what they own in exchange for eliminating their debt. It’s true that in some cases, your property may be taken or sold by the Trustee to pay some of your creditors.
[Read more about Understanding Role of Trustee in Bankruptcy]
If you file a case without properly analyzing and applying the available exemptions, your property can be taken and sold. That’s why navigating your way through bankruptcy exemption statutes alone can be very difficult and is not advised.
It is always wise to retain an experienced bankruptcy attorney who is familiar with the processes and understands the law, as well your concerns, expectations and needs.
This process is not as simple as filling out a few forms, and only an attorney proficient in bankruptcy law can help determine whether there is any risk for exposure of your assets and she can ensure that your home, car, wages and other belongings are fully protected.
So What Property is Protected in Chapter 7?
The Federal Bankruptcy Code recognizes that you need some assets after filing for bankruptcy in order to move forward and get a fresh start, so it provides for certain exemptions.
If property is exempt, it cannot be taken by the trustee assigned to your case or used to pay your creditors’ claims. Simply put, this property is protected from creditors and is called exempt property.
Exemptions are different in each state and choosing which exemptions apply can be complicated. What you get to keep depends on where you live, and how long you have lived there.
In California there are two sets of exemptions to choose from depending on your assets.
Determining the correct set of exemptions and applying them thoughtfully and skillfully can mean the difference between your keeping your property and having to give it up.
In almost every case we file, we implement creative and effective ways to increase protection and maximize exemptions so that the client keeps all of his or her assets. If there is some unavoidable risk that an asset is not fully protected, we make sure that the client knows before we file the case so that he or she can make an informed, calculated decision. Once the case is filed, there is no undoing it – meaning there is no way to keep the trustee assigned to your case from going after your exposed assets.
Many people are able to file Chapter 7 bankruptcy and keep their home or car. Depending on the equity in the property, you can figure out which bankruptcy chapter is right for you.
Be sure to discuss all the bankruptcy exemptions available to you in detail with a qualified bankruptcy attorney who knows the bankruptcy process from all sides and can apply that knowledge to provide you with effective and efficient solutions.
Take control of your finances by contacting us today
Located in Los Angeles, Royzman Law Firm provides a wide range of services for individuals, entrepreneurs and small-to-midsized businesses dealing with the weight of excessive debt. Call Royzman Law Firm at 310.954.8503 or contact us online to schedule a free consultation.
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