If you are facing an insurmountable level of personal debt, you may be considering Chapter 7 bankruptcy. Chapter 7 bankruptcy can result in the loss of certain of your assets, but in the vast majority of cases, the filer’s exempt assets are mostly exempt and you can retain them. An experienced Bankruptcy lawyer will work with you to determine how you may be able to retain your assets in an ethical manner.
Cash
Any cash you have available, either on hand or in savings or checking accounts, is an asset of your Bankruptcy estate to which the Trustee can look to pay your creditors. However, there are so many exemptions that apply to these funds, that with careful ethical planning, you may plan your bankruptcy to be able to keep all of your cash on hand and in the bank. For example, 6 months of wages for a head of household in Florida, may be retained by the Debtor. There are many other exemptions which apply to your funds on hand.
Investments, Retirement and Brokerage Accounts
Stocks, bonds, and money contained in brokerage accounts can be liquidated as part of a Chapter 7 bankruptcy case but are protected just as your cash is protected.
Your retirement accounts are safe from liquidation. There are exceptions to this, such as when you dump money into your retirement account at the last minute just before you file for bankruptcy.
Your Home
Your primary home is an exempt asset because you need a roof over your head A vehicle with equity in it or a vacation home may or may not be protected under Chapter 7 bankruptcy. You may need to look at Chapter 13 bankruptcy which allows the Debtor to retain all of his/her assets. An experienced bankruptcy lawyer will be able to help you analyze your situation and offer good advice on this topic.
Your Collections
If you have a collection that has monetary value, such as a collection of stamps, coins, jewelry, or video games, your collection can be liquidated as part of your Chapter 7 bankruptcy case.
Family Heirlooms
Sentimental value means nothing in a Chapter 7 bankruptcy case. If you have family heirlooms with monetary value, they may be liquidated to satisfy your debts. You may not give these to loved ones in order to keep them away from your bankruptcy trustee without careful planning – such a transfer may be deemed to be a fraudulent transfer that the court can overturn. If you have valuable family heirlooms that you do not want to liquidate as part of your bankruptcy case, discuss them with your lawyer to determine if there is a way to protect them without committing a fraudulent transfer.
Work with an Experienced Orlando Bankruptcy Lawyer
Navigating the bankruptcy process can be daunting. To make it easier on yourself, work through the process with an experienced Orlando bankruptcy lawyer. Contact our team at Goodblatt · Leo today to schedule your initial consultation in our office.
Resource:
law.cornell.edu/uscode/text/11/522
FAQs
In short the answer is NO. Most individuals get to keep the majority of their assets in bankruptcy while still discharging their debts. Generally, each individual filing bankruptcy is exempt (or protected) $1,000 in personal property and $1,000 in vehicles.
What three things are not dismissed with Chapter 7 bankruptcy? ›
Debts not discharged include debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal ...
What assets do you lose in Chapter 7? ›
Common types of assets and nonexempt property a debtor could potentially lose in Chapter 7 bankruptcy include:
- Vacation properties.
- Investment accounts.
- Stocks and bonds.
- Rental properties.
- Luxury items.
- Valuable artwork.
- Jewelry.
- Antiques.
A Chapter 7 bankruptcy will sell off many of your assets to pay your creditors. In a Chapter 13 bankruptcy, you keep the assets but must repay your debts over a specified period. Bankruptcy can do severe damage to your credit score and should be considered a last resort.
Does Chapter 7 bankruptcy ruin your life? ›
Cons. It can ruin your credit. Although bankruptcy can make sense for your overall financial well-being, it can take several years to rebuild your credit history. As a result, you may need to put certain financial moves on hold until you can qualify for better terms.
What happens to your bank account when you file Chapter 7? ›
If you are filing for bankruptcy under Chapter 7, you probably can expect to keep your checking account with a bank. If you owe a debt to the bank, however, the bank may have the right to take some of the funds from your account as a set off for the debt. This might arise if you hold a credit card through the bank.
What possessions do you lose in bankruptcy? ›
What creditors can take in a bankruptcy
- Vehicles.
- Land.
- Houses.
- Investment properties.
- Savings accounts.
- Any other items of value, like artwork or jewelry.
In California, you can protect your assets when filing for bankruptcy by utilizing the state's generous exemption systems (System 1 and System 2) to shield specific assets like your home equity, car, and retirement accounts.
Will I lose my inheritance if I file Chapter 7? ›
In most cases, you wouldn't need to worry about property or funds you acquired after filing for bankruptcy—they'd be yours. However, a special bankruptcy rule extends the date for inheritances. If you become entitled to an inheritance within 180 days of filing for bankruptcy, it will become part of the estate.
What happens to your stuff when you file bankruptcy? ›
A common concern of our clients is whether they will lose their possessions if they file for Bankruptcy. The answer to that question is quite simply, generally no. The Bankruptcy Trustee or your creditors will not take the clothes off your back or the majority of your household goods and other possessions.
Cons of Filing Chapter 7 Bankruptcy
- A bankruptcy stays on your credit report for up to 10 years. ...
- You can only file bankruptcy once every eight years. ...
- You are only allowed a certain number of exceptions. ...
- The legal process can be daunting and some find it embarrassing. ...
- Secured debts are dis-chargeable.
Again, there's no minimum or maximum amount of unsecured debt required to file Chapter 7 bankruptcy. In fact, your amount of debt doesn't affect your eligibility at all. You can file as long as you pass the means test. One thing that does matter is when you incurred your unsecured debt.
Why shouldn't you file for bankruptcy? ›
Your Credit Score Will Likely Suffer
Bankruptcy is recorded on your credit reports and remains there for seven years from the filing date for Chapter 13, or 10 years from the filing date for Chapter 7. A bankruptcy on your credit reports has a deep, long-lasting negative impact on your credit scores.
What are 3 debts that are not dischargeable in bankruptcy? ›
The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units ...
What cannot be discharged in Chapter 7? ›
Filing for Chapter 7 bankruptcy eliminates credit card debt, medical bills and unsecured loans; however, there are some debts that cannot be discharged. Those debts include child support, spousal support obligations, student loans, judgments for damages resulting from drunk driving accidents, and most unpaid taxes.
What are the two situations in which a court might dismiss a Chapter 7 filing? ›
Except in rare circ*mstances, the court will typically dismiss your case without prejudice if you:
- fail to file a required form with the court.
- fail to provide all necessary supporting documents (such as tax returns and pay stubs) to the bankruptcy trustee.
Most consumer debt is dischargeable in bankruptcy. Chapter 7 bankruptcy wipes out medical bills, personal loans, credit card debt, and most other unsecured debt. Debt that is related to some kind of “bad act” like causing someone injury or lying on a credit application can't be wiped out.
