What Happens to my Property and my Assets When I File for Bankruptcy?
What happens to my property and my assets when I file for bankruptcy?
Bankruptcy is designed to give you a financial fresh start. It would not be much of a fresh start if the bankruptcy court took all your property away from you in the process. For this reason, the law exempts some property from being sold or liquidated for creditors. Our Auburn bankruptcy attorneys are skilled at maximizing every protection and exemption allowed under the Bankruptcy Code, and we will fight to maximize your relief.
In Washington we can use either state or federal exemptions. The state exemptions are generally better for someone with a lot of equity in their home because the state homestead exemption is $125,000. Federal exemptions are better for debtors who do not have any equity in a home because their “wildcard” exemption is $11,975. The wildcard exemption covers any kind of property not covered by a specific exemption and can be added to an exemption if it does not cover a certain piece of property. Other kinds of exemptions include cars, which is about $3,500 for both state and federal, retirement plans, which are 100% exempt, household goods, jewelry, tools of the trade and personal injury settlements.
If you have property that is vulnerable in a Chapter 7, sometimes you can offer the trustee a cash buy out instead of losing it. You can protect the property by filing a Chapter 13 and paying your creditors what they would have received from the liquidation through your payment plan. If you have questions about your property rights after filing for bankruptcy, we encourage you to call our King County bankruptcy legal services offices for a free, no obligation initial consultation.
One of our Auburn bankruptcy lawyers will be happy to explain your legal rights and options when it comes to protection your specific property in either a Chapter 7 or a Chapter 13 bankruptcy.What about my car and my house?
If you are making payments on a car or a house, you can keep them if you continue to make the payments. In a Chapter 7 you just have to continue making the payments as agreed. In a Chapter 13, you can consolidate and restructure the payments. You cannot change the terms of a mortgage in a Chapter 13 but you can get caught up on late payments. You can also strip a second mortgage from a home in a Chapter 13 if the balance of the first mortgage is more than the value of the house.
In general, bankruptcy offers flexible ways to both wipe out debt and protect your property. The choice between federal and state exemptions and whether to file a Chapter 7 or a Chapter 13 can be a matter of balancing a lot of competing interests. It is wise to consult a bankruptcy attorney before making an error that could get in the way of obtaining the most effective fresh start possible.
Our King County and Auburn bankruptcy lawyers are here to help. We want you to understand that filing for bankruptcy DOES NOT mean that you are somehow a failure in life. This is what your creditors and those evil debt collectors who keeping calling you day and night want you to believe. But, this is complete rubbish. The Federal and Washington State bankruptcy laws were specifically enacted to assist honest and hard-working folks who suddenly find themselves down on their luck.
Talk to one of our Auburn, Washington bankruptcy professionals now!
Get straight answers and real help today!