Talking About Bankruptcy Services

How Your Assets Are Handled In Chapter 7 Bankruptcy

11 April 2017 by Carlos Gomez

Filing for Chapter 7 bankruptcy is a great way to eliminate debts you have, but it may also require giving up some of the things you own. During a Chapter 7 case, there will be a trustee handling the case, and he or she will examine your assets carefully. Before you file, it's important to understand the risks you may have, and the best way to do this is by discussing this with a bankruptcy attorney, such as Hamby & Hamby, P.A.

Why Assets Matter

The major benefit people have when filing Chapter 7 is the ability to have unsecured debts completely forgiven. This means you will not have to repay any of the debts that qualify for discharge in your case. To compensate for the debts that are discharged, the trustee will seize assets you have. The goal is to sell these items and use the cash to pay off some of the debts that were forgiven.

The Assets You Might Lose

When you file for bankruptcy, you will be required to list all major assets you have. This can include your house, cars, RVs, and any other assets that are somewhat valuable. The first thing the trustee will look for with these assets is the equity you have in them. The trustee will not be interested in assets that have no equity.

For example, if you own a boat that is worth $5,000 that you owe $4,800 on, he or she most likely will not want this asset simply because there will be no benefit in selling it. If the trustee could earn only $200 maximum, it would be a waste of time to seize this asset. On the other hand, the trustee may seize it if you owe nothing on the boat. In this case, it would be worthwhile to seize it and sell it.

Many Of Your Assets Might Be Exempt

One thing your attorney will talk to you about is exempting your assets. Any assets that are considered exempt are things you will be able to keep, and your attorney will be able to tell you how this works so you have an idea of what you will get to keep for sure and what you might lose. An example of an asset you can exempt is a car. Most states allow people to keep a car as long as it is worth less than a certain amount. You might also be able to exempt your house so that you can keep it.

Before you file for Chapter 7, you must find out exactly how it works. If you would like to learn more about this, contact a bankruptcy attorney today.

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