What Is The Best Way To Keep My Assets During Bankruptcy?

Filing for bankruptcy can help you get rid of debts you cannot afford to pay. However, you may be concerned about losing assets if you file a bankruptcy case. While some people may have to surrender an asset or give up an asset to obtain a bankruptcy discharge, most people can keep their assets while eliminating debt. In this blog, our Massachusetts bankruptcy attorney discusses the best way to keep assets during bankruptcy.

Bankruptcy Exemptions Protect Assets During Bankruptcy

A bankruptcy exemption is a federal or state law that protects property during bankruptcy. It creates exempt property that the court nor your creditors can seize to pay your debts.

The Federal Bankruptcy Code provides federal bankruptcy exemptions that cover numerous assets. When an asset is exempt, it cannot be used to satisfy debts. However, states can opt out of using the federal exemptions.

You must claim bankruptcy exemptions when you file your bankruptcy case. An exemption may cover all or part of the equity in property. Equity is the fair market value of the asset minus any recorded liens or valid loans.

Massachusetts gives debtors the choice between using federal and state bankruptcy exemptions. Because federal and state bankruptcy exemptions differ, reviewing the list of exemptions is crucial to determine whether federal or state rules offer the best protection for your assets.

Chapter 7 vs. Chapter 13 Bankruptcies and Protecting Assets

Generally, Chapter 13 helps you protect your assets over a Chapter 7 because:

Chapter 7 Liquidation and Assets

A Chapter 7 bankruptcy is a straight or liquidation bankruptcy case. A bankruptcy trustee is appointed to administer the bankruptcy estate. The trustee reviews the debtor’s assets to determine if any property has non-exempt equity.

The Chapter 7 trustee can seize non-exempt assets to sell for the benefit of the debtor’s unsecured creditors. A debtor can offer to pay the trustee the non-exempt equity in a lump sum. If not, the trustee sells the asset.

After selling an asset, the trustee pays the debtor any exemption they claimed. The trustee uses the remaining money to pay the debtor’s creditors.

Chapter 13 Protects Assets

Chapter 13 is a government-supervised reorganization plan. The debtor proposes a plan to reorganize their debts into a manageable monthly payment. The court appoints a Chapter 13 trustee to administer the estate.

The Chapter 13 trustee does not seize assets. If a debtor has non-exempt equity in an asset, the amount of non-exempt equity is added to the base of the Chapter 13 plan. In other words, the debtor pays their creditors what they would have received in a Chapter 7 liquidation.

Therefore, Chapter 13 helps protect your assets during bankruptcy. It spreads out the non-exempt equity over a 60-month period. Debtors do not need to surrender the asset or pay all the non-exempt equity in a lump sum.

What Is the Best Way to Protect Assets During Bankruptcy in Massachusetts?

Working with an experienced bankruptcy lawyer helps you protect your property when you file for bankruptcy relief. Bankruptcy exemptions can be confusing and complicated.

An attorney understands how to apply exemptions to protect assets in bankruptcy. Before filing for bankruptcy, speak with an attorney to discuss whether any of your assets could be in jeopardy if you file a bankruptcy case.

Contact Us for a Free Consultation with a Massachusetts Bankruptcy Attorney

Bankruptcy gives you the fresh start you need to recover from a financial crisis. It also helps you protect your assets from creditors while eliminating debts. Contact Logan A. Weinkauf P.C. to schedule a free consultation with an experienced Massachusetts bankruptcy attorney.

The post What Is The Best Way To Keep My Assets During Bankruptcy? appeared first on Logan A. Weinkauf, PC..