What Will You Lose?
Which property you keep depends mostly on whether you file for Chapter 7 bankruptcy, or file for Chapter 13. With Chapter 7 you are most likely to lose assets, if you have any. With Chapter 13, you may be able to keep most of all of them. Either way, you don't lose everything. Here's how it works.
When you file for bankruptcy, you relinquish complete ownership of your property to the bankruptcy court. It then becomes the bankruptcy “estate.” The court-appointed bankruptcy trustee—whose job it is to recover as much as possible from you to pay your creditors—holds your property on behalf of your creditors.
The law allows you to keep, to “exempt,” certain the things from the bankrupcty estate that you need to maintain a home and job, such as household furnishings, clothing, and an inexpensive car. Your attorney will review with you your assets, and the exemptions you are legally entitled to keep. This is a critical step in the process, because you must not conceal any assets from the court, and you must be sure and list all assets, whether exempt or not, under penalty of law. Without an attorney's advice, you could break the law and not even know you had done it. The penalties are severe. Or you could end up losing assets you are entitled to keep.
Of course, everyone wants to keep both exempt and nonexempt assets, and might even entertain doing so. Don’t do it. Simply put, the bankruptcy court is not the place to skirt the rules.
What Property Is Included in the Bankruptcy Estate?
All of it—no exceptions. When you file for bankruptcy, you must provide a list of all of your assets and property to the court. The list will include, for example:
It's a good idea for you to be clear about what you will be able to keep of not keep in your bankruptcy. One of our attorneys will be happy to help you understand this critical piece of your bankruptcy: (804) 294-3003.