One of the biggest concerns people have when considering bankruptcy is losing everything they own. It’s likely something you’ve considered if you’re struggling financially.
The truth is filing for bankruptcy can put some of the things you own at risk, but you aren’t going to lose all of your possessions. Bankruptcy actually helps you protect quite a few things better than if you let your financial struggles continue without taking action.
In Chapter 13 bankruptcy, you’re able to protect nearly everything you own.
Chapter 13 bankruptcy allows you to repay all or a portion of your debt through regular payments to the bankruptcy trustee. Those payments are distributed to your creditors and as long as you make the required payments, you keep your property.
Chapter 7 bankruptcy is a little bit different.
In Chapter 7, you’re able to keep exempt property. You and your attorney will discuss what is considered an exemption and he or she can make sure exemptions are listed properly in your bankruptcy petition to ensure certain items are not at risk.
If the bankruptcy trustee deems an item low value and not worth selling based on its current resale value, chances are they won’t take the item from you. This is why personal items are of minimal interest. If something is unlikely to get a good return, it’s not worth the effort to try to sell it and it’s unlikely to attract the attention of the trustee.
In general, you’ll be able to keep your personal and household possessions when you file for bankruptcy. Things like your clothing, household goods, and personal items are probably not at risk as long as their resale value is not significant.
Keep in mind, it might be possible to exempt high-value items when you file for bankruptcy, but this takes some effort and expertise. Exempting valuable assets is one of the primary reasons why it’s so important to work with an experienced bankruptcy attorney.
Some people consider giving their at-risk assets as gifts in the hope of keeping the items in the family – or at least preventing the court from confiscating them.
Unfortunately, this isn’t going to help you and chances are the recipient will be forced to turn the gift over to the court. If an asset is at risk in bankruptcy, giving it to someone else isn’t going to protect it, but it could create an embarrassing and complicated situation for you and your friend or family member.
It’s also important to remember that gift giving right before you file for bankruptcy can be construed as fraud. If you have any doubts about giving something away, make sure you speak to your bankruptcy attorney before taking action.
For more information about bankruptcy, gift giving, and asset protection in general, check out this article from Forbes.com.
Filing for bankruptcy can be confusing and intimidating. It’s understandable why someone considering bankruptcy would be concerned about the things they own. Like most things, there’s a good chance what you’re imagining won’t be as bad as reality and bankruptcy will actually help you get your financial life back in order.
For more information or to speak to someone about the actions you need to take to protect your belongings when you file for bankruptcy, contact R. Flay Cabiness, II, P.C. at (912) 554-3774 (Brunswick, GA); (912) 375-5620 (Hazlehurst, GA) or; (912)-554-3756 (Jesup, GA).
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