Will I Lose Assets In Bankruptcy?

Bankruptcy is a legal process in which individuals or businesses declare that they are unable to pay off their debts. It is a challenging and sometimes overwhelming situation to face. One of the major concerns, when filing for bankruptcy, is whether you will lose any of your assets. If you are considering bankruptcy and concerned about losing your assets, keep reading to find out what you need to know.

First and foremost, it is crucial to understand that bankruptcy laws vary from state to state. So, before making any decisions, it is essential to speak with an experienced bankruptcy attorney in your state. An attorney will help guide you through the process and ensure that you understand the potential consequences of filing for bankruptcy. In Chapter 7 Bankruptcy, known as a liquidation bankruptcy, the trustee will sell “non-exempt” assets to pay off creditors. Assets that are exempt are not available to creditors and are protected from liquidation to an extent. Many states have limited exemptions for clothing, household goods, a car, and a certain amount of equity in your home.

Consult with an Citrus Heights bankruptcy attorney about what assets are exempted in your state. If you have a lot of assets, Chapter 13 bankruptcy might be an option for you. It is known as a reorganization bankruptcy, unlike Chapter 7. It allows you to keep your assets while creating a payment plan with your creditors. This payment plan is based on your ability to pay and is typically five years. In Chapter 13, you may be able to keep assets that would be liquidated under Chapter 7. In some circumstances, chapter 13 can also help you keep assets like a car by restructuring missed payments. When you have a car loan, you can place the debt inside the chapter 13 payment to reduce monthly payment depending on the remaining balance. A trustee appointed by the court will determine what assets are available for liquidation or payment in Chapter 7. The trustee will collect, sell, and distribute the proceeds to your creditors. If you have assets that are not exempt, it is possible that you could lose them in bankruptcy.

If you are considering filing for bankruptcy, it is essential to understand the potential consequences and what assets you might lose. However, with the right planning and an experienced bankruptcy attorney on your side, you can protect many of your assets. Bankruptcy can be difficult time, but it can be the best solution to help you get back on your feet financially. Take the time to speak with an attorney and gain more knowledge to help protect your assets. It’s important to remember that the benefits of bankruptcy usually outweigh the risks.