A common misconception is that you may lose everything by filing for bankruptcy. On the contrary, this may be the only way to protect your assets. Read on to discover how you can save your assets by filing for bankruptcy and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can best serve you.
Is it possible for my assets to be saved by filing for bankruptcy?
First of all, when you file for bankruptcy, an automatic stay will be placed on your home. Put simply, an automatic stay bars a mortgage lender from issuing a notice of foreclosure on your home. What’s more, it bars your mortgage lender from participating in any further collection activities until your bankruptcy proceedings have officially come to a close.
Also noteworthy, when you file for bankruptcy, you may receive certain exemptions. Essentially, exemptions are used to protect your assets from being sold to repay creditors.
How do exemptions work in Chapter 7 or Chapter 13 bankruptcy?
The exemption system varies state by state, but it also varies between Chapter 7 bankruptcy and Chapter 13 bankruptcy. You must fully understand the implications of each bankruptcy type before opting for one.
Firstly, in your Chapter 7 bankruptcy, otherwise known as liquidation bankruptcy, your bankruptcy trustee will work to repay your creditors as much as possible. They will do so by selling your non-exempt property and distributing the earnings to your creditors. Examples of non-exempt property may include your cash on hand, your bank accounts, your investments, your second home, and your second vehicle.
So, with a Chapter 7 bankruptcy, it may be difficult to save your assets. However, you may still be able to keep a certain non-exempt property if your trustee cannot justify the costs associated with selling it.
On the other hand, saving your assets may be made easier in a Chapter 13 bankruptcy. This is because this type of bankruptcy has your bankruptcy trustee work to reorganize your debts and repay your creditors through a three- to five-year plan. With this, it is required that your non-exempt property, like your priority debts and secured debts, be paid back in full. Though, this does not mean that your trustee will sell your non-exempt property to do so like they would in a Chapter 7 bankruptcy.
So, with a Chapter 13 bankruptcy, you may just have to incorporate the non-exempt portion of your property into your repayment plan. With this, your main concern may be how your non-exempt property may affect your repayment plan instead of how you may lose your assets.
You must remember that there is a countdown for when you may file for bankruptcy before your house is foreclosed and your other assets are taken. So you should not wait too long before contacting a competent Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center.
