What can you lose in a Bankruptcy filing? If choosing to file for bankruptcy protection, it is important that you are aware of what you can lose.
Under the bankruptcy protection act you are able to discharge or restructure a good part of your debt. Each type of filing, Chapter 7 or Chapter 13, has certain restrictions on the assets you may keep. You can expect your credit to be impacted from a bankruptcy filing as well, although it can and will improve as time passes from the date of your filing. With the advice of experienced bankruptcy attorneys at Albuquerque Business Law, you can trust that your individual needs will be addressed.
What could you lose filing Chapter 7 Bankruptcy?
While Chapter 7 bankruptcy allows you to discharge almost all debts with the exception of exempted debts such as property tax or IRS taxes, any assets you own will be liquidated by the federal court to offset any creditor losses. You must turn over any property to the Bankruptcy Trustee, who will sell it to satisfy the creditors. Many times there are few assets available to liquidate over the exempted assets you are allowed to keep. Below are a list of assets you may lose in a Chapter 7 bankruptcy.
- Recreational vehicles
- Second cars
- Your primary residence, if you have been unable to maintain your mortgage payments. If you are current on your payments and can continue to make payments, you will likely be allowed to keep it.
- A second home or land.
- Any inheritance received within 6 months of filing bankruptcy
- Any cash on hand or checking or savings accounts are usually taken in Chapter 7 bankruptcy proceedings except for a minimal set amount you are allowed to keep.
What could you lose filing a Chapter 13 Bankruptcy?
Chapter 13, as it allows for restructuring of your debt, does not seize your assets as long as you complete your repayment plan. However, if you fail to complete the repayment plan, you could lose some assets. In general, these are the main points that would affect you when filing a Chapter 13:
- All available income must be used for repayments of your debts.
- You will pay higher legal fees for a Chapter 13 due to its complexity.
- Limits of debt that can be restructured must be under $1,000,000, with no more than $250,000 in unsecured debt and $750,000 in secured debt.
- You will be tied to a strict repayment plan for 3 to 5 years, depending on how you restructured it in the petition.
- You are involved in the bankruptcy court process for the entire term of the 3-5 year plan, until all debts are paid.
To get more details as to exactly how bankruptcy exemptions would impact you, it is best to meet with a skilled and dedicated bankruptcy lawyer from Albuquerque Business Law. Don’t hesitate, act now and start rebuilding your financial future.