The decision to file for bankruptcy is extremely difficult no matter the case. But when you are concerned about what will happen to your assets you may have a harder time making that decision. You may be wondering what will happen to your assets once you file for bankruptcy.
However, it’s important to understand that what will happen to your property after filing for bankruptcy isn’t simply black and white. It depends on the type of bankruptcy for which you’ve filed. Under Chapter 13 bankruptcy, you will not lose any of your property. But under Chapter 7 bankruptcy, you could lose any property that isn’t protected under an exemption. The good news is that for many people who file for Chapter 7, their property is worth less than the amount they’re allowed to exempt (i.e. protect), and thus, they ultimately get to keep all of their assets.
Chapter 13 Bankruptcy
If you file for Chapter 13 bankruptcy, you will not lose your property – regardless of whether it’s considered exempt. However, you will have to submit a repayment plan for how you will pay your debt and this plan will generally last about three to five years with monthly payments. But once all of these payments are made, your debt will be gone.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, however, is a little different. While you don’t have to worry about repaying any of your debt under Chapter 7 bankruptcy, you will be obligated to give your non-exempt property to your bankruptcy trustee so that he or she can sell it before allocating proceeds of it to your creditors. Your state or the federal exemptions (if your state allows it) will determine whether your property is exempt. Once you’ve fulfilled any remaining requirements, your bankruptcy debts will be discharged. All told, the process lasts about four to six months from the time that you file.
State exemptions usually include your car, home, home furnishings, clothing, retirement accounts, and tools of your trade. Some states also give you a wildcard exemption, meaning that you have up to a certain dollar amount to protect the property that you desire, which typically includes liquid assets like bank accounts, cash on hand, tax refunds, etc.
There’s more good news: even if your property isn’t considered exempt, there is still the possibility that you may be able to keep it. The trustee may decide that the property isn’t worth the time and money it would take for them to sell it – so they simply won’t.
Other times, if your property that is non-exempt is worth enough but you want to keep it, you may be able to negotiate giving something else up in exchange.
Another option is that if your property has to be sold, you can repurchase it yourself – assuming that you can collect at least the same amount of money that your creditors would have received had it been sold. If your exempt property is really important to you, you can choose to sell it and borrow enough money to buy it back.
Toronjo & Prosser Law Helps Those Who Are Dealing with Bankruptcy
It’s undoubtedly stressful to realize that you don’t have enough money, and even more stressful when you realize that filing for bankruptcy may be your best option. That’s why it’s so important to consult with a knowledgeable and experienced Dallas bankruptcy attorney. At Toronjo & Prosser, our qualified Texas Bankruptcy Attorneys can help you to navigate the process. To learn more or to schedule a free consultation contact us online or call us today!