Do You Lose Everything in Bankruptcy?
While worrying that you will lose everything when you declare bankruptcy is a valid concern, it is important to know that there are many bankruptcy exemptions you can use to keep key items like your home or car as well as much of your personal property. Filing for bankruptcy will help you discharge your debt, or reorganize it into a payment plan so you pay back some of it, then discharge the rest. The plan you develop will depend on the type of bankruptcy you file. Filing Chapter 7 bankruptcy, for example, can result in the liquidation of many assets in an attempt to satisfy creditors. This will typically include items like art and jewelry. However, when you file Chapter 13 bankruptcy, there is usually more asset protection, which means you have a lower chance of losing your valuables or nonexempt property.
Why Should I File Bankruptcy if I Risk Losing Some of My Property?
Bankruptcy may seem daunting, but it actually offers you a fresh start if you are currently overwhelmed by debt. During the bankruptcy process, most of your debt will be discharged or wiped out. You may also create a plan to pay off some of your debt over time, depending on your budget. During the bankruptcy process, it is likely some of your property may be taken and sold to pay your creditors. However, you will not lose everything. The law understands that debtors need a roof over their heads and a vehicle to get to work. Because of this, bankruptcy often allows you to keep basic possessions and assets as you move forward to a debt-free future. The Bankruptcy Code offers some property exemptions. If property is exempt, your creditors cannot take it to pay your debts.
How to Claim Exemptions
When you file for bankruptcy you will include a list of your exempt property including:
- A description of each item you are claiming as exempt
- The specific law that allows you the exemption
- The fair market value of the items you are claiming as exempt
The bankruptcy court, trustee and your creditors will evaluate this and either accept it or make an objection. If an objection is made, the objector must show why the property is not exempt. If there are no objections, the property will be excluded from your bankruptcy estate and cannot be taken by creditors. If you are facing bankruptcy and want to ensure some of your key assets like your car or home are not taken, be sure to speak with the bankruptcy attorneys at the Oswalt Law Group in Phoenix. We have extensive experience helping debtors gain a debt-free future through the bankruptcy process. We will work to protect your key assets and help you get the best deal.