Domestic Asset Protection Trusts
Some states have enacted specific laws allowing the formation of domestic asset protection trusts , which are self-settled trusts that are nonetheless protected from judgment creditors. In contrast, in Florida, self-settled trusts are not protected from creditors.
The most commonly known domestic asset protection trust states are Wyoming, Nevada, Delaware, and Alaska. Over the years, many websites have been created touting the benefits of asset protection trusts in these states for U.S. residents.
However, Florida debtors should be cautious before rushing to set up asset protection trusts in these states. It is uncertain which states law would apply in a Florida court should a creditor seek to collect on the assets in the trust. Some courts have held that no matter what state the trust is formed in, Florida lawnot the law of the trust formation stateapplies.
What Can I Keep When I File For Bankruptcy
The main reason people avoid bankruptcy is the fear that they will lose everything they own in the process. A fresh start may be appealing, but walking away with nothing to your name will hardly feel like an opportunity for financial security. Fortunately, North Carolina permits those who file for bankruptcy to claim certain properties as exempt. These assets will not be sold in the process of repaying your creditors.
The type of bankruptcy proceeding you choose is closely related with your exemptions, so enlisting the help of an experiencedbankruptcy attorney near you is essential. At theLaw Office of Kimberly A. Sheek, I will answer every question you have about filing for bankruptcy. My goal is for you to understand each step of the proceeding, as well aswhat life may look like afterward. Together, we can protect as many of your assets as possible to ensure you have what you need to build a better future.
Learn more about bankruptcy exemptions in North Carolina, by calling 842-9776 for a free consultation.
Protecting Bank Account Funds By Spending The Money
You can always use your funds to purchase necessary things, such as food, housing, clothing, and medical care. If you’re worried about losing money because you can’t exempt it, spend it before filing for bankruptcy. Just be sure to keep good records unless the bankruptcy trustee questions your actions. If you can’t spend all of the money before filing, chances are you aren’t bankrupt.
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How Do Bankruptcy Exemptions Work
Most of the Chapter 7 bankruptcy exemptions have a limit. This means that anyone fiing bankruptcy can protect certain types of property up to a certain amount.
For example, say your car is worth $3,500, and the exemption for motor vehicles in your area is up to $6,000. In this case, you would be allowed to keep your vehicle.
Say, however, that your vehicle is worth $9,000. In this situation, your trustee can sell your vehicle for $9,000. They would then give you $6,000 of the profits, and divide the remaining $3,000 amongst your creditors.
Asset Protection Through Risk Management
Asset protection starts with common sense planning. People can reduce legal risks and lawsuits by planning and minimizing unnecessary risks in their business and personal dealings. For example, people should not rely on oral promises and agreements in their business dealings as they often result in confusion and misrepresentation. Avoid getting involved in business and financial relationships with people you do not trust or with people who seem combative and adversarial.
Business agreements should be reviewed by a lawyer in advance. A few dollars spent on attorney fees before signing the contract can save substantial attorney fees in the future.
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Working With A Bankruptcy Attorney
Bankruptcy law can be hard to understand. Because of this, its highly advised that you work with a bankruptcy attorney that can walk you through the process and clarify any questions or concerns you might have. There can be a lot of questions during this extremely stressful time. Let the lawyers at Resnik Hayes Moradi LLP walk you through the process so you can achieve the best outcome possible.
What Is An Automatic Stay
After you file for bankruptcy, you have the protection of an immediate, but temporary, automatic stay. The automatic stay can, for example, immediately stop a foreclosure, an eviction, car repossession, or wage garnishment. It can also stop debt collection, harassment, and disconnection of utilities.
The automatic stay may provide a powerful reason for filing for bankruptcy. In most of the situations listed above, the automatic stay can buy you a few days or weeks in which to figure out your next move. If your primary motivation in filing bankruptcy is to gain the benefits of the automatic stay, you donât need to file all of your papers at once. You just need to file the three-page petition, a signature declaration, and a listing of your creditors. In addition, within 180 days prior to filing, you will have to visit an approved credit counseling agency for advice and budget analysis. You will have to file a certification of such counseling when you file your petition. You have 15 days in which to file the rest of your papers. If you donât, your case will be dismissed.
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Get Help From Our Waco Tx Chapter 7 Bankruptcy Lawyers Today
Are you ready to take the next step? We can help. At the Law Office of Simer and Tetens, our skilled Texas bankruptcy lawyers have extensive experience handling no asset Chapter 7 bankruptcy cases.
No matter your financial circumstances, we are committed to helping you find a sustainable solution. To schedule a FREE, no-obligation consultation, please do not hesitate to contact us today.
With an office in Waco, we represent clients in McLennan County and throughout Central Texas.
What Debts Cannot Be Discharged In Bankruptcy
The following debts cannot be discharged in either a Chapter 7 or a Chapter 13 bankruptcy case. If you file Chapter 7, you will still owe these debts after your case is over. If you file Chapter 13, these debts will either be paid in full during your plan, or the balance will remain at the end of your case.
Nondischargeable debts include:
- Unlisted debts, unless the creditor had knowledge of your bankruptcy filing.
- Recent income tax debt and other tax debt.
- Fines imposed for violating the law.
- Student loans, unless you can show that it will cause a hardship for you to repay them.
- Debts you owe under a divorce decree or settlement.
In a Chapter 7 and 13 case, a creditor may object, and a judge may agree, to theseadditional debts being discharged:
- Debts incurred by embezzlement, fraud, or larceny.
- Certain credit purchases made within 90 days or cash advances made within 70 days of filing.
- Restitution or damages awarded in a civil action for willful or malicious injury to a person.
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Start Here To Learn About Protecting Property In Chapter 7 Bankruptcy
Updated By Cara O’Neill, Attorney
When considering Chapter 7 bankruptcy, most people want to know if they can keep their property. The short answer is maybe. Chapter 7 bankruptcy wipes out many qualifying debts, but there is a catchif you own too much property, the bankruptcy trustee can sell some of it and pay the proceeds to your creditors.
So how much property can you keep? The answer depends on “exemptions”state laws that tell you what you’re allowed to protect in Chapter 7 and 13 bankruptcy.
Bankruptcy Exemptions On Prince Edward Island
- No limit on clothing for you and your family
- No limit on medical or health aids
- Any motor vehicle needed for transportation to work up to $6,500, or up to $3,000 if not used for work
- Household furniture, utensils, equipment, food and fuel up to $5,000
- Tools used by you in your business or trade, up to $2,000
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Chapter 7 Bankruptcy Petition
A debtor initiates a Chapter 7 bankruptcy by filing a Petition with the bankruptcy court. The bankruptcy petition is a universal federal form that covers a substantial amount of financial information about the debtor and his family. Debtors must sign their Petition under oath.
The bankruptcy Petition requires the debtor to list all his unsecured debts separately from his secured debts. Unsecured debts include personal loans and credit cards issued by banks, such as Visa, MasterCard, American Express, or Discover, and other credit cards used to purchase consumable items. Vehicle leases, medical bills, and personal loans are also unsecured debts. Tax debt is also unsecured until the IRS issues a tax lien.
Secured debts include those debts where the creditor has a security interest in the debtors property to guarantee payment. Examples of secured debts include mortgages, car loans, and loans from finance companies . If a debtor has purchased goods using a store credit card, such as a card from Rooms to Go, Best Buy, etc., the store probably has a security interest in certain items purchased, which makes the store a secured creditor.
Property That Is Not Exempt
Items that the debtor usually has to give up include:
- Expensive musical instruments, unless the debtor is a professional musician
- Collections of stamps, coins, and other valuable items
- Family heirlooms
- Cash, bank accounts, stocks, bonds, and other investments
- A second car or truck
- A second or vacation home
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What Is Exemption Planning
Exemption planning is the practice of organizing your financial affairs in a way that maximizes your exemptions and allows you to protect the most amount of property in bankruptcy. Converting nonexempt property into exempt assets can be part of exemption planning. However, if you engage in excessive exemption planning, it can be considered bankruptcy fraud and result in criminal prosecution or an objection to your bankruptcy dischargethe order that erases qualifying debt.
Filing For Bankruptcy You Must List All Of Your Assets
Basically, whenever you file bankruptcy, you are required to list ALL of your assets.
Your assets include the following:
- Your house
- Financial assets
- Other tangible items
Your assets may also include some things that are easily forgotten like bank accounts, life insurance, inheritance, and potential lawsuits.
A good bankruptcy attorney will give you some type of workbook to help you remember your assets. Take your time when filing this workbook out.
Forgetting to list an asset can cause you to lose that asset. Once you have listed all of your assets, your bankruptcy attorney will look at exemptions to determine if your assets are exempt.
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What Are Bankruptcy Exemptions
Exemptions allow you to keep a certain amount of assets safe in bankruptcy, such as an inexpensive car, professional tools, clothing, and a retirement account. If you can exempt an asset, you don’t have to worry about the bankruptcy trustee appointed to your case taking it and selling it for your creditors’ benefit.
Many exemptions protect specific property types, such as a motor vehicle or furniture, up to a particular dollar amount. Sometimes an exemption protects the entire value of the asset. Some exemptions, called “wildcard exemptions,” can be applied towards any property you own.
Why You Need Protection From Lawsuits
You may think doctors, corporate executives, and those in other litigation-prone professions are the only ones who need to worry about protecting their assets. Not so. There are many circumstances in which your assets can be attached or garnished, including if you file for bankruptcy, get a divorce, or are on the losing side of a civil lawsuit.
Most people don’t consider these circumstances until they occur. If your teenage child is on the wrongful end of a motor vehicle accident, for instance, it could result in the damaged party going after your assets.
Picture this scenario: You hear a knock at the door one night. You find an elderly couple looking for the Smiths. Your name is Jones. You inform the couple that the Smiths live next door. The couple thanks you and walks across your lawn to go to the Smiths. When they get halfway across, the man steps into a hole that your dog dug and breaks his hipthe one he just had replaced. The next call you get could be from a lawyer trying to find out your financial worth and what type of insurance you carry.
It doesn’t matter that the couple should have stayed on the sidewalk or at least taken care to avoid such an accident. In the end, your home, your dog, and a hole in your yard makes it your fault.
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Bankruptcy Exemptions For Farmers
Up to 160 acres of land is exempt if your principal residence is located on that land and is part of your farm. Any personal property necessary for your farming operations over the next 12 months is also exempt from bankruptcy. For more information about bankruptcy exemptions in Alberta, please speak to a local Licensed Insolvency Trustee.
Protecting Bank Accounts By Avoiding Set
Be careful if you owe your bank or credit union any money when you file for bankruptcy or if your bank or credit union has extended credit to you . The institution has the right to “set off” the debts owed to it against any bank account funds you may have with them. Banks and credit unions have the right to set-off your accounts at any time, regardless of whether or not you file for bankruptcy.
Although banks rarely exercise their set-off rights, it makes sense to take precautions before filing for bankruptcy. The best way to avoid a set-off is to withdraw the funds from any account held with a bank or credit union to which you owe a debt.
It’s also possible that your bank will “freeze” your accounts once you file for bankruptcy. Several banks and credit unions do this to preserve account funds until the bankruptcy trustee decides what to do with them. Although a judge will eventually “unfreeze” the accounts, it could take several weeks . But the best precaution is to withdraw funds before bankruptcy and spend them on necessary items or transfer the funds to a different bank.
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Chapter 7 Bankruptcy: What Can You Keep In 2021
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In a Nutshell
Chapter 7 bankruptcy exemptions allow you to protect property during your bankruptcy. Usually these exemptions allow you to keep most of your day-to-day property.
If you’re considering filing for bankruptcy, you might have images of repo-men coming into your home and taking your possessions, selling them to the bank and leaving you empty-handed.
While this may be the way bankruptcy looks in cartoons, in reality, the government created laws that help protect your property during bankruptcy. These protections are called the bankruptcy exemptions.
Bankruptcy Exemptions By Province
Statute: Read the Civil Enforcement Act.
- Food for a 12 month period.
- Clothing up to $4,000
- Household furniture and appliances up to $4,000
- One motor vehicle up to $5,000
- Equity in your principal residence up to $40,000, reduced to your share if you are a co-owner
- Tools of your trade up to $10,000
- Farm land where your principal source of income is farming, up to 160 acres
- Farm property requirements for 12 months operations
- Social allowance, handicap benefit or a widows pension if the benefits are not intermingled with other funds
- Health aids
To ask about what you can keep if you go bankrupt in Alberta and the rules for bankruptcy exemptions in Alberta, please consult your local Bankruptcy Alberta Trustee.
British Columbia Exempt PropertyStatute: Read the Court Order Enforcement Act and Regulations.
- Clothing for yourself & your depenants, no dollar limit
- Household goods up to $4,000
- One motor vehicle up to $5,000 .
- Tools of your trade up to $10,000.
- Principal residence up to $9,000
- Medical aids
To ask about what you can keep if you go bankrupt in British Columbia and the rules for bankruptcy exemptions in British Columbia, please consult your local Bankruptcy British Columbia Trustee.
Manitoba Exempt PropertyStatutes: Read the Executions Act and the Judgments Act.
- Food and fuel for six month supply or cash equivalent
- personal clothing
- Tools of the trade up to $1,000
- Seeds and livestock for domestic use
Ontario Exempt PropertyStatute: Read the Executions Act.
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Exchanging An Exempt Asset For Nonexempt Property
Most debtors in Chapter 7 bankruptcy don’t have enough money to buy back a nonexempt asset from the trustee. If you want to keep a specific nonexempt asset, you can offer to give the trustee one of your other exempt assets in exchange. In general, whether the trustee will agree to accept a different asset in exchange for your nonexempt property will depend on the value of the asset and the cost and labor associated with selling each type of property.
Learn more about the basics of property exemptions in bankruptcy and when a trustee might object to your exemptions.
Common Problems In Florida Asset Protection Planning
The main problem with late-stage asset protection is the potential that asset titling or transfers can be undone as fraudulent conveyances or fraudulent conversions .
Transfers done in the face of a legal threat may withstand fraudulent conveyance attacks with proper planning. For example, in most cases, Florida law permits the transfer of non-exempt assets to a homestead property even after a court enters a judgment.
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