Will I Lose Everything If I File For Chapter 7 Bankruptcy
On Behalf of Frankfort Law Group | Nov 3, 2021 | personal bankruptcy |
Many people in Will County who are struggling with financial hardships may be afraid to file for bankruptcy, because they think they will lose everything if they do. This is not true. When a person files for Chapter 7 bankruptcy, there are exemptions, that is, property they can keep while still taking advantage of the protections and relief bankruptcy offers.
Debunking Bankruptcy Myths: Will I Lose Everything That I Own If I File Bankruptcy
Submitted by the Bond & Botes Law Offices – Monday, October 29, 2012
Many people that come to see us about bankruptcy are concerned about losing their property. There is a misconception that, upon filing for bankruptcy protection from one’s creditors, the court will take your home, car, and furniture. The truth is that, in the vast majority of bankruptcy cases filed by individuals, absolutely no property is taken or sold by the court.
In some circumstances, the person filing bankruptcy will own more property than he can protect, or claim as exempt, in the bankruptcy case. Even in this situation, however, he will be able to maintain the property by filing a Chapter 13 Bankruptcy. In this type bankruptcy, the debtor will work with his attorney to formulate a plan to pay the creditors over a 3 to 5 year period the amount that the creditors would have received if his assets had been liquidated. Chapter 13 for an individual is similar to what large corporations often do through a Chapter 11 bankruptcy. The debtor keeps the assets he needs to effectively reorganize his finances while being protected by the bankruptcy court.
Reasons To File For Bankruptcy
There are some circumstances in which filing for bankruptcy may be your best recourse:
- You’ve already tried to negotiate. Suppose that you have attempted to negotiate a repayment plan with one or more major , as experts often recommend as a first step, but they have not budged. They want their full payment and aren’t willing to be paid out over timeand you don’t have the means to make that payment. This can leave you with few options other than to file for bankruptcy.
- Your liabilities far exceed your income and assets. Another major reason some individuals file for bankruptcy is that they simply cannot pay their debts, and just servicing the debtthat is, making the required monthly paymentsexceeds the monthly income they generate. For example, consider someone who owes $500,000 to a bank and whose monthly mortgage payment is $4,000. If this person only has income of $2,000 a month, and another $25,000 in assets to draw on, they may have few other options than to file for bankruptcy. Otherwise, they will deplete their assets in about a year and be completely unable to make that $4,000 payment going forward.
You May Like: How Many Times Has Trumps Businesses Filed Bankruptcy
Will I Lose My House If I File For Bankruptcy
This depends on several factors, and is best answered by a Licensed Insolvency Trustee. In most provinces, your home is one of the assets subject to liquidation in a bankruptcy. However, certain provinces exempt some or all of the value of a principal residence.
If your home is mortgaged, only the equity is subject to seizure. In the event you are able to retain your home, a Trustee can help you decide if keeping your home is the most prudent financial strategy.
See also: What Happens to My House After Filing Bankruptcy?
Things You Need To Know About Bankruptcy In Canada
Are you carrying a lot of debt? Struggling to make your debt payments? Unable to cover all or some of your monthly bills? These are all warning signs that its time to review your debt relief options.
If youre wondering if bankruptcy is the right debt solution for you, this list of facts can help you understand more about the bankruptcy process.
Read Also: Has Trump Ever Filed For Bankruptcy
Are Debts Affecting Your Ability To Keep Up With Your Mortgage
Ask yourself this question: If I could deal with all of my other debts, would paying my mortgage be easier? We help people answer that question every day.
Its your home, so you always pay your mortgage, but you are falling behind on your credit cards and other bills, and you worry that you may soon also fall behind on your mortgage payments. You worry that you may lose your home.
You can file bankruptcy even if there is equity in your home. If you owe more money to your creditors than the value of what you own you are considered insolvent. If you are insolvent you are eligible to file for bankruptcy or proposal in Canada.
With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house. In fact, by eliminating other debts that are making it difficult to keep up with your mortgage payments.
What Will You Lose When You File For Bankruptcy
You May Like: Filing Bankruptcy In Texas Yourself
Filing Bankruptcy In Nj Can Make Getting A Job More Difficult
I get many questions about how bankruptcy will affect a clients life going forward. Usually it is how it will affect their credit score or sometimes how it might affect security clearance or military service. However, one question that is not usually asked is how it will affect future employment.
Many of my clients retain me because a job loss caused their financial difficulties. They are hoping that they will be able to get a job before the unemployment benefits run out. Unfortunately, recent federal court decisions have shown that a bankruptcy on your credit report can make that goal harder to attain.
Will Bankruptcy Benefit You
With so many factors involved in the decision-making process, a Yes or No answer isnt possible, but here is a good guideline to use in making a final decision.
If you cant find a way to get out of debt in the next five years and have diligently researched solutions then yes, bankruptcy can benefit you.
But weigh the pros and cons and remember one other thing: You cant go to jail just because you owe someone money.
Advertiser Disclosure
Debt.org wants to help those in debt understand their finances and equip themselves with the tools to manage debt. Our information is available for free, however the services that appear on this site are provided by companies who may pay us a marketing fee when you click or sign up. These companies may impact how and where the services appear on the page, but do not affect our editorial decisions, recommendations, or advice. Here is a list of our service providers.
Recommended Reading: Oregon Bankruptcy Means Test
Do You Lose Everything In Bankruptcy
While worrying that you will lose everything when you declare bankruptcy is a valid concern, it is important to know that there are many bankruptcy exemptions you can use to keep key items like your home or car as well as much of your personal property. Filing for bankruptcy will help you discharge your debt, or reorganize it into a payment plan so you pay back some of it, then discharge the rest. The plan you develop will depend on the type of bankruptcy you file. Filing Chapter 7 bankruptcy, for example, can result in the liquidation of many assets in an attempt to satisfy creditors. This will typically include items like art and jewelry. However, when you file Chapter 13 bankruptcy, there is usually more asset protection, which means you have a lower chance of losing your valuables or nonexempt property.
What Happens If You Declare Bankruptcy
If you declare bankruptcy, creditors have to stop any effort to collect money from you, at least temporarily. Most creditors cant write, call or sue you after youve filed. But even if you declare bankruptcy, the courts can require you to pay back certain debts. Each bankruptcy case is unique, and only a court can decide the details of your own bankruptcy.
Lets talk for a moment about what bankruptcy does and doesnt cover:
You May Like: Epiq Corporate Restructuring Llc Phone Number
Prince Edward Island Exempt Property
If you are behind on child or spousal support payments, the above exemptions do not apply to any item but tools of your trade.
For details on what you can keep if you go bankrupt in Saskatchewan and the rules for bankruptcy exemptions in that province, please consult a Licensed Insolvency Trustee in Saskatchewan.
Will I Lose All My Assets When I File For Bankruptcy
Contrary to popular belief, when you file for bankruptcy, you will not lose everything. Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain. There are also certain costs and processes that apply across the country. Lets take a look at them below.
Also Check: How To File For Bankruptcy In Nc
When To File Chapter 7 Bankruptcy
There are several warning signs that you should be considering Chapter 7 bankruptcy. Five strong signs that indicate filing for Chapter 7 may be the right solution include:
Cover Your Four Walls
When youre making a budget that will work for you right now, where do you start? Whats the main stuff you need to focus on covering? Start with what we call your Four Walls: food, utilities, shelter and transportation. These are the main essentials.
Keep everyone fed, the lights on, a roof over your heads, and gas in the car to get to work. If these Four Walls are only things you can pay for while youre getting out of debt, thats called survival mode, and that may be what you need to jump into right now.
You May Like: How To File Bankruptcy In Missouri
Whats The Difference Between Chapter 7 And Chapter 13 Bankruptcy
The major difference is time Chapter 7 takes 4-6 months Chapter 13 takes 3-5 years and money. You can have most, or all your unsecured debt discharged in Chapter 7 bankruptcy. In Chapter 13, some of your debt is forgiven, but only if you meet the conditions approved by the trustee and bankruptcy judge.
If You File For Bankruptcy Will You Lose Everything
On Behalf of Miller & Miller Law, LLC | Mar 31, 2021 | Bankruptcy |
If you are struggling to pay medical bills, credit card debt or even living expenses, you are in good company. In fact, the average American has more than $90,000 in outstanding balances to pay. Still, having more debt than you can afford may ruin your quality of life.
Filing for bankruptcy protection may help you both to address your debt in a proactive way and to work on building a brighter financial future. Still, you may worry you stand to lose all your assets during the bankruptcy filing. This is probably not the case, however.
Recommended Reading: Epiq Corporate Restructuring Llc Letter
You Won’t Lose Property Protected By A Bankruptcy Exemption
Everyone needs things to maintain a job and home, and bankruptcy’s fresh start wouldn’t mean much if it stripped you of all your belongings. Instead, bankruptcy exemption laws protect property people need, like a working car, furnishings, and clothing.
So how do you know what you can keep?
You’ll look to your state exemption laws. Each state has a set, and federal bankruptcy exemptions exist, too. Most states require filers to use the state exemption laws. However, some states let filers use the federal exemptions if they’d protect more property.
Make sure you have the correct list. If your property is on it, you keep it.
Exemptions In British Columbia:
- No limit on clothing for you or your dependents all clothing is exempt from bankruptcy
- Household furnishings and appliances up to $4,000
- One motor vehicle up to $5,000 unless you are behind on child support payments, in which case the limit is $2,000
- Work tools and work-related property up to $10,000
- No limit on medical and dental aids for you or your dependents
Also Check: How Do I File Bankruptcy In Ohio
What Property Can I Keep After I Declare Bankruptcy
Filing for personal bankruptcy results in a number of significant consequences. In particular, you may have to give up some of your personal belongings, you will have to fulfill a number of obligations to your Licensed Insolvency Trustee , you will remain responsible for certain debts that are not cleared by bankruptcy, and your credit rating will be damaged.
What Happens To My Tax Refunds
Your licensed insolvency trustee will file two tax returns for the year that you declared bankruptcy:
- a pre-bankruptcy return
- a post-bankruptcy return
Any tax refunds applicable to the date of bankruptcy and on your post-bankruptcy return will be sent to the trustee. Any taxes owing on your pre-bankruptcy return are included in your bankruptcy. Any taxes owing on your post-bankruptcy return must be paid by you. While you lose your income tax refunds, you keep your HST cheques and Child Tax Benefits.
Don’t Miss: Can You Rent An Apartment After Chapter 7
What You Cannot Keep
Savings Bonds, TFSAs and RESPs can be seized in a bankruptcy as they are essentially cashable savings accounts. However, most people contemplating bankruptcy have depleted their savings accounts many months before filing a bankruptcy in an effort to avoid bankruptcy so this is not usually an issue. If you still have savings a consumer proposal might be a better option for you than bankruptcy as you may be able to keep some or all of your savings in a proposal.
Most people worried about losing an asset in a bankruptcy would choose to file a consumer proposal instead. In a consumer proposal you can keep control of all your assets regardless of their value.
Bankruptcy exemptions, and what you keep or lose in a bankruptcy in Canada, can be quite complicated. Talking with a Bankruptcy Canada Trustee over the phone or in person to review your options is always free. Our trustees offer convenient hours and the initial consultation is always free with no obligation to you. Contact a bankruptcy trustee in your area if you have questions.
Read about other common bankruptcy myths:
Asset Conversion That Could Be Considered Fraud
Converting nonexempt assets into exempt property in bad faith or with the intent to hinder or defraud your creditors can rise to the level of bankruptcy fraud. Each bankruptcy jurisdiction has its own opinion regarding the type of exemption planning that is permissible.
When analyzing whether your actions constitute fraud, courts consider:
Self-help services may not be permitted in all states. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising. In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Your use of this website constitutes acceptance of the Terms of Use, Supplemental Terms, Privacy Policy and Cookie Policy. Do Not Sell My Personal Information
You May Like: Renting A Home After Bankruptcy
Can I Still Get Credit After I File For Bankruptcy
Under Chapter 13 Bankruptcy, you are not allowed to borrow or acquire any new debt under the repayment plan unless approved of by the Bankruptcy Court, and only under special circumstances. This lasts until the debt repayment plan is completed and the bankruptcy is discharged. By the end of your repayment period, the bankruptcy will still remain on your credit report but if all payments have been made on time this will help improve your credit score as all of your accounts become current. Filing for Chapter 13 could be especially helpful if you are facing, or already in, foreclosure.
When it comes to Chapter 7, some lenders, often auto lenders, are willing to work with customers during and after their bankruptcy proceedings. The lenders are aware that the customer’s debt to income ratio has improved with the discharge of their debt. You would have to pay a higher interest rate but if you can make regular payments on time, your credit score should improve. Often times after one year of consistent on-time payments you could have the opportunity to refinance your car or trade it in and get a better interest rate.
