Property Kept after Filing Bankruptcy
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Can Property be Kept After Filing Bankruptcy?
For some people, filing for personal bankruptcy or consumer bankruptcy can help them get a fresh start financially. Many people believe that they will lose some or all of their property after claiming bankruptcy, but that isn’t necessarily true. A person filing for bankruptcy can usually keep some of their property, depending on what type of bankruptcy they file for.
What’s the Difference Between Chapter 7 and Chapter 13 Bankruptcy?
For personal bankruptcy, a person can either file under Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is also known as “Liquidation Bankruptcy”. In this type of filing, the person’s assets may be “liquidated” or sold, with the proceeds of the sales being used to finance the person’s debt. While some or most of the person’s property may be sold, they may have some property to keep after the proceedings are done.
In contrast, Chapter 13 is known as “Repayment” bankruptcy. This is where the court allows the debtor to keep all or most of their property, on condition that they will pay back their creditors the debts that are owed. Chapter 13 is usually available where the person still has some resources to pay their debts off with.
Thus, the property kept after claiming bankruptcy will largely depend on whether the person has filed under Chapter 7 or Chapter 13 laws.
What are Exemptions and Exclusions?
Certain types of property are exempt from Chapter 7 laws. These are known as Chapter 7 exemptions, meaning that the assets may be factored in when calculating bankruptcy amounts. However, the person may be allowed to keep a portion or percentage of the asset that is considered “exempt” from the proceeding. Creditors can’t reach the amounts that are considered exempt. Chapter 7 exemptions may include:
- Some property, up to a certain dollar limit. Most federal laws place limits of:
- $9,800 for furniture
- $18,450 worth of the home equity
- Some equity in automobiles and other vehicles
In contrast, Chapter 7 exclusions are those assets that aren’t really factored into the bankruptcy calculations. There are not really any dollar amounts for exclusions. These can include:
- Certain trust funds
- Some types of annuities
- Retirement funds
What Other Options Do I Have for my Property After Bankruptcy?
In some cases, it may be possible to buy back your property after it’s been claimed by a creditor. This can be the case if you have the resources, since most creditors aren’t really particular about where the payments come from- just as long as you have the money. This might be a good option especially if the property has some sort of sentimental value to you.
Should I Hire a Lawyer for Help With Property and Bankruptcy Issues?
Understanding how property and bankruptcy overlap can sometimes be confusing. It’s in your best interest to hire a finance lawyer for advice regarding property kept after filing bankruptcy. You might not be aware of the different options that are available to you, but your lawyer can explain how bankruptcy laws affect you, and can represent you in court during hearings.
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Last Modified: 08-16-2013 03:12 PM PDT
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