While the above might appear to be a random string of words, they are all actually closely related when it comes to one interesting and little-known facet of bankruptcy. When you declare that you can no longer pay your bills and are seeking debt relief, then you are setting yourself up for a potential loss of property. Read on to understand how you might be able to avoid that loss and an explanation how all those elements come together for some chapter 7 filers.
The liquidation bankruptcy
When you file bankruptcy you are actually also inviting the bankruptcy trustee to take a look at your property for possible seizure. Most people are not going to have a lot of valuable property to interest the trustee, but depending on the size of your bankruptcy and the value of some of your belongs like your home and car you might find yourself the subject of a home visit. Bankruptcy trustees have the right to take some of your property, sell it and try to pay off some of your creditors and they actually make a commission on what they manage to sell.
Exemptions to save the day
The possibility of losing property this way is very low given the variables and exemptions. You are allowed to keep a certain amount of personal property and exemptions further reduce the value of a piece of property thus making it less interesting to the trustee. Used goods fetch very little on the marketplace so most of your stuff is of no interest to the trustee. The home, your vehicles, boats, real estate and savings accounts are another matter. There is a homestead exemption that allows most filers to keep their home, however.
Other ways to save your property
Not only does the property have to exceed your exemptions in value, but the total amount of your bankruptcy is also at play. The lower the total amount of your debt declared on your bankruptcy the less likely the trustee will be to seize any property.
You should also keep in mind that you might still owe money on those cars, houses, boats and more and this further reduces the amount they are worth to the trustee. They would have to satisfy the loans before they could make any profit and that is not likely to happen.
The potential to lose property with a chapter 7 filing is one of the main issues that should be discussed with your bankruptcy lawyer as soon as possible and doing so can help you make a more informed decision about whether or not to file.
Speak to a professional like Greg Dunn Bankruptcy Attorney for more help.