Are you an underemployed person with a lot of debt and contemplating Chapter 7 bankruptcy? Many people in such a situation are concerned about what the creditors can take away from them if they file Chapter 7 bankruptcy. There are some misconceptions among common people which creates a lot of confusion. So let’s get the facts straight.
A lot of people get worried thinking that the creditors will try to take away their personal items like clothes, jewelry, books, household items etc. This is totally baseless. If you don’t have a jewelry collection that would make jaws drop, your creditors won’t be interested in them. Do you know that personal assets usually have really low resale value?
In many states like Texas, the creditors cannot take away your home even if you have filed Chapter 7 bankruptcy in case you have just secured debts (credit card debt or medical debt for instance). Nonetheless, if you have a mortgage debt and you default on it then you would end up losing your home.
If your vehicle comes under bankruptcy exemption then the creditors cannot take it away either. In many states vehicles come under exemptions if the debtors owns them completely. So consult with your bankruptcy attorney to check whether your vehicle is protected or not.
There are certain things that you should remember while protecting your assets during bankruptcy:
- It is wise not to transfer an asset out of your name in order to save it. This is not seen as reasonable behavior by the bankruptcy court. If you would like to save an asset then you must proceed legally.
- It is important to inform the trustee in case you are involved in some lawsuit. You should know that lawsuits are considered as assets. So the trustee might have interest in your lawsuits.
- In case you are about to receive any inheritance then you must mention it to the trustee. The inheritance can either be in the form of money or in the form of property.
- Finally, you should know that it is possible to file bankruptcy just before foreclosure. It would give you some extra time (usually six to eight weeks).
You indeed have reasons to worry about your assets before filing bankruptcy. So it is always a smart idea to be well informed before you proceed. Whenever you are in confusion about the affect of bankruptcy on your assets, remember the above points.