Frankly speaking, bankruptcy puts you in a situation where you draw up an overwhelming list of hopes to save property or personal belongings. On the one hand, bankruptcy law constructs a fresh start out of its many laws, but on the other hand, it requires full disclosure of assets. Fortunately, many strategies and legal protections are available that can help keep most of what you own.
Understand Bankruptcy Exemptions
Exemptions, for the most part, determine what you can keep during bankruptcy. They can change from state to state and, generally, often include the basics, primary residence generally limited to a certain amount of equity, a vehicle, personal possessions, retirement accounts, and household goods. Knowing your exemptions ahead of time allows you to strategize before filing.
Choose the Right Type of Bankruptcy
The type of bankruptcy that you are filing for, whether Chapter 7 or 13, greatly affects how your assets are protected.
Chapter 7 may involve a trustee liquidating nonexempt assets to pay creditors, and many people are shocked by how much they can keep using exemptions. Chapter 13 allows you to retain the property during the repayment of debts over time using a court-approved repayment plan.
Avoid Transferring Assets Before Filing
Transferring property to a friend or family member before filing will be enticing, but it is quite fraudulent in the eyes of most courts and trustees, who have a great deal of experience reviewing recent transactions. The wrong transfers could spoil the case. Better to be upfront about everything you own.
Retirement Accounts and Insurance Policies Are Safe
Also, most retirement accounts and pension funds, as well as their life insurance policies, are totally protected by bankruptcy exemptions. Name these accounts appropriately document them so that you can guard against future mishaps regarding financial security.
This post was written by Trey Wright, an experienced bankruptcy lawyer in Jacksonville, FL! Trey is one of the founding partners of Bruner Wright, P.A. Attorneys at Law, specializing in bankruptcy law, estate planning, and business litigation.
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