Losing Assets in Bankruptcy
What about my assets, will I lose my property?
People hear that if you file Chapter 7 you may have your assets taken by the Federal Government. That, of course, is a stretch. While the Bankruptcy panel trustee has a duty to liquidate non exempt assets for the benefit of your creditors, the key word is non exempt.
Virtually 90% of all clients do not have any assets seized. That’s because the Sate of Montana has exemption laws that let you keep almost all of your property.
Montana has one of the country’s most liberal homestead exemptions. A debtor can keep up to $350,000 in home equity. You must repay what you owe, but that is something most debtors are fine with.
Chapter7, assets are valued by their wholesale value. Thus when you use garage sale values on your personal property, almost all are exempt. Your furnishings, clothes, appliances, etc are usually free from the trustee.
Each Debtor gets a $4,000 automobile exemption for a total of $8,000 for a husband and wife.
A qualified retirement plan is exempt.
There are questions regarding what you own, and its value that can determine before filing whether or not some of your assets are at risk.
The most common asset seized are federal and state tax refunds.
There are ways to minimize this risk, but sometimes ,depending on what time of the year you file, the trustee takes those refunds for that one year.
In each case , I review assets and offer help to minimize any loss. In the next blog we will discuss what can be sold or transferred legally. I will talk about reaffirmation agreements and rebuilding credit.