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:

• real estate (any residence, building or land)
• all vehicles (cars, vans, trucks, tractors, sport utility vehicles, motorcycles, watercraft, aircraft, motor homes, ATVs, etc.)
• personal property
• household property (furniture, electronics, collectibles, hobby and sports equipment, firearms, clothes, and jewelry)
• financial assets (bank accounts, stocks, bonds, investments, and retirement accounts, ownership interests in any business, legal claims, debts owed to you, tax returns, and other monetary interests)
• business assets (anything that's part of or used in a business you own, such as a equipment or merchandise)
• any other assets you own.

On the list of your property, you're required to estimate the value of each asset. Not all assets are valued the same way. For instance, you must use the replacement value (what it would cost to replace an item-same age and condition) for household items.  You must use fair market value real estate property.  Again, you should rely on your bankruptcy attorney for guidance.

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.