Speak To A Bankruptcy Lawyer
If you have questions about what property you will be allowed to retain if you file for bankruptcy under Chapter 7 of the Bankruptcy Code, it is prudent to seek the counsel of an experienced and knowledgeable bankruptcy attorney. Contact Debra Booher & Associates Co., LPA in Cuyahoga Falls, OH, today to schedule a consultation.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
Dont Use Checks Right Before Filing
If you anticipate that youre going to file bankruptcy, stop writing personal checks a couple weeks before filing your case. Instead, make necessary payments with alternative methods like cash or a cashiers check. In bankruptcy, any outstanding personal check is treated like a bad debt and the cash in your account is an asset that the Trustee may take for your creditors. By the time of your meeting of creditors, the check will have cleared and the money will be gone, but the Trustee may demand you turn it over.
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Will I Lose Property If I File Bankruptcy In Tennessee
If you are struggling financially, you may have considered filing for bankruptcy but decided against it because you heard that it would force you to part with your property. However, this widely held belief is not true in most cases, as there are laws in place called bankruptcy exemptions that allow you to keep the majority of your most important property.
How exemptions work
Depending on whether you file for Chapter 7 or Chapter 13 bankruptcy, the exemptions work in different ways. In Chapter 7, the bankruptcy trustee sells your property and applies the proceeds to your debts. However, the trustee may only sell property that is not fully covered by a bankruptcy exemption. As a result, most people who are in a position to file Chapter 7 lose very little property during the process.
During Chapter 13 bankruptcy, your debts are consolidated into a payment plan. Under the plan, you repay your debts, in full or in part, by making payments each month over a three to five-year period. The amount you must pay each month is tied to the value of your bankruptcy estate. In this type of bankruptcy, the value of your property covered by an exemption is deducted from the value of your estate, which lowers the amount of your monthly payment.
Exemptions available in Tennessee
One of the most important exemptions available in Tennessee is the homestead exemption, which allows you to keep your house in most cases. Tennessee law exempts the following amounts:
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Can I Keep Pets In Chapter 7 Bankruptcy
Yes, in almost every case. Dont worry, youre not going to lose your rescue cat or dog, and the chances are high that youll be able to keep your hamster, finch, and lizard, too. Unless you have an unusually valuable petsuch as a show dog or an income-generating racehorseor your monthly ongoing pet expenses are unreasonably high, youll get to keep your pet. Heres why.
Like the rest of your property, youll get to keep pets in Chapter 7 bankruptcy if:
- you can protect your animal with a bankruptcy exemption
- the bankruptcy trustee abandons it because selling it wont generate money for creditors, or
- you pay for it with post-bankruptcy income or a loan.
Not many state exemptions for pets exist . But most states have a wildcard exemption that can usually be applied to any personal property, up to a certain dollar amount.
Even so, pets typically dont have much market value, if any, and for a good reasonfree pets are easy to find, and shelters are full. So, even if you dont have an exemption that specifically covers your pet, its value will likely be low. For instance, it isnt unusual to value a goldfish at $1 and a rescue cat at $25. In such cases, the trustee isnt going to sell your animal.
Now, of course, if your animal is valuable, and you cant protect it, then your pet might be at risk of being sold into a new home unless you can pay to keep it.
Bankruptcy Exemptions: What Property Can You Keep In Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, almost all of your property becomes property of the bankruptcy estate. That doesn’t mean you lose everything. The purpose of bankruptcy is to provide people with a fresh startand part of that fresh start is keeping the things you need to hold down a household and job. Bankruptcy exemptions allow you to keep the things you’ll need to work and live, such as furniture, dishes, clothing, and a car.
How much property you can exempt differs depending on which state you live in because each state has a set of exemption laws .
Example. If you own a car worth $5,000 and your state allows a $6,000 car exemption, then you can keep your vehicle. However, if you live in a state that only allows a $2,000 car exemption , then the bankruptcy trustee may take your car and sell it. From the proceeds of the sale, the trustee will pay you the exemption amount of $2,000 and distribute the rest among your creditors.
If I File A Chapter 7 Bankruptcy In Pennsylvania Can I Keep My Home Car Or Other Personal Items
Unfortunately, theres a widespread myth that filing for Chapter 7 bankruptcy in Pennsylvania will cause you to lose your house, your car, and your other personal belongings. This harmful myth has likely stopped thousands of people from filing but in most cases, it simply isnt true. On the contrary, most people who file Chapter 7 can keep most or all of their possessions. In fact, Pennsylvanias bankruptcy laws allow filers to choose between two sets of bankruptcy exemptions, which prevent certain assets from being sold off during the process. In this article, the Chapter 7 bankruptcy lawyers of Young, Marr & Associates will separate fact from fiction by explaining when and how you can keep your property after filing bankruptcy in Philadelphia.
Can I Keep My Wages Or Bonus In Chapter 7 Bankruptcy
It depends. In Chapter 7 bankruptcy, you get to keep income you earn after you file your case. However, if you earned the income or bonus before you filed for bankruptcy, and received the money after you filed, the money will likely belong to your bankruptcy estate.
Youll need to look at your states bankruptcy exemption laws to determine whether youll need to turn over some of your pre-filing wages or bonus to the trustee. Some states have exemptions designed specifically to protect a certain amount of earned wages or bonuses. If your state doesnt have a specific exemption that applies to your bonus payment, you might be able to use a wildcard exemption to protect it.
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Is A Chapter 7 Bankruptcy Right For Me
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out your debts in exchange for your giving up property, except for exempt property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
Will I Have To Go To Court
In most bankruptcy cases, your only personal contact with the bankruptcy process is an appearance at a proceeding called the meeting of creditors to meet with the bankruptcy trustee and any creditor who elects to participate in your bankruptcy. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. To find the location of the court that serves your area visit the Indiana Federal Bankruptcy Court Directory page.
What Personal Property Is Exempt
When it comes to personal property, states vary widely as to what is exempt, and in what amount. Types of personal property that are exempt in many states include: a car , household goods, clothing, jewelry, wedding rings, books, food, appliances, tools of your trade, and tax-exempt retirement accounts. Some states exempt firearms, provisions to last a certain period of time, livestock, and more.
Need Help Choosing Get Professional Assistance
If youre the least bit unsure whether bankruptcy is what you need, speak with a certified credit counselor. Credit counseling can:
- Clarify whether you might be able to get your finances in order without bankruptcy.
- Review your income and expenses, discuss alternatives and help you develop a personal budget.
- Help you develop a feasible repayment plan.
- Teach you how to rebuild credit after bankruptcy.
- Counsel you on other debt relief options.
If you believe you should file for bankruptcy, discuss the situation with a reputable bankruptcy attorney. Like many other complicated legal issues, expert advice can be significant, and bankruptcy attorneys have the experience and know the legal landscape to increase the odds that your bankruptcy case will be a success. Bankruptcy may be the second chance that you need.
Once youre through the bankruptcy process, its important to rebuild your credit so you dont get in the same situation again.
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Can I Own Anything After Bankruptcy
Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after your bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt. You can also keep any property covered by Indiana bankruptcy exemptions through the bankruptcy.
An Example Using Real Estate
For example, lets say a states homestead exemption allows a married couple filing a joint bankruptcy case to protect $37,500 of equity in their home. Therefore, assuming they could afford the mortgage payments after bankruptcy, this theoretical couple could keep a $500,000 home through the bankruptcy process as long as home equity does not exceed $37,500 . Equity is calculated by subtracting debt on the property from its value. The entire value of property is not the determining factor for exemption purposes.
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Buying Nonexempt Property From The Trustee
If your nonexempt property is worth too much for the trustee to let you keep it, you can offer to repurchase the asset by paying the nonexempt value. Usually, you can negotiate a lower amount that takes into account the fact that the trustee won’t have to incur additional storage and sale costs. You can use the income earned after your bankruptcy filing, or sell exempt property and use the proceeds to fund the purchase. Or, some filers pay for the property with a loan from a friend or family member.
Can I Keep My House In Chapter 7 Bankruptcy If I Dont Have Any Equity
In some cases, yes. If your mortgage balance exceeds the value of the house, the Chapter 7 trustee wont take it for sale in bankruptcy. The trustee must pay off the mortgage and liens, and wont bother selling the home if there wont be anything left for other creditors.
Example. Marjorie owns a house valued at $200,000. Her mortgage balance is $225,000. Since she has no equity in the property, the Chapter 7 trustee wont bother selling it. She can keep the house.
That doesnt necessarily mean that your home is safe in bankruptcy, however. Youll still need to keep up with your mortgage payment. Otherwise, the lender can take the home through foreclosure, either by:
- filing a motion during the bankruptcy case asking the court to lift the automatic stay that stops creditors from collecting, or
- waiting until the Chapter 7 case ends.
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Experience You Can Rely On
At the law office of Cunningham, Chernicoff & Warshawsky, P.C., we have provided sound counsel to individuals and businesses throughout central Pennsylvania since 1978. Our lawyers have more than 130 years of combined practice experience. We offer large-firm resources and results with a small-firm attitude, using hard work, determination, skill, knowledge and experience to help you get the outcome you want.
Where Do I File If I Havent Lived In The Same State Or District For The Last Six Months
Federal Law requires that the case should be filed where the debtor has lived for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period. 28 U.S.C. sec 1408. This means that the case should be filed in the bankruptcy district in which the debtor has lived for the greatest portion of the last six months.
Debts You May Eliminate Under Chapter 7
Chapter 7 will typically eliminate the following kinds of debts:
- Lawsuit debts/civil judgments
- Personal and private loans
- Some taxes, including state, local, and federal income taxes
- Deficiency debts on foreclosures and repossessed vehicles
Please be aware that certain debts, like federally backed student loans, are not dischargeable in bankruptcy, along with debts like alimony and child support, damages for personal injury to someone else resulting from DUI, criminal fines and restitution, court fees, and certain taxes.
Bankruptcy Court: Control Over Your Financial Affairs
You are effectively transferring control of your assets to the bankruptcy court by filing Chapter 7 bankruptcy. You cant sell your property or pay off pre-filing debts without the permission of the court.
With a few exceptions, you can do whatever you like with the property you acquire and the money you make from filing bankruptcy.
The Bankruptcy trustee for Chapter 7 Bankruptcy oversees the bankruptcy process.
The court exercises control through a bankruptcy trustee, who is selected by the court. The trustee is responsible for ensuring that creditors receive as much as possible. The amount of assets that are recovered by creditors is what the trustee gets paid.
The trustee or the trustees staff will review your documents and search for exempt property to be sold for creditors benefit. To free up assets for creditors, the trustee will also examine whether financial transactions made in the year before your filing can be reversed. In most Chapter 7 bankruptcy cases, the trustee finds no value to be sold.
What Doesnt Bankruptcy Do
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
- Eliminate certain rights of secured creditors. A secured creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt
- Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes.
- Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan. Discharge debts that arise after bankruptcy has been filed.
What Property Can You Keep In Chapter 7 Bankruptcy
The answer to this question depends on whether you select the Pennsylvania bankruptcy exemptions or the federal bankruptcy exemptions. Its important to understand that bankruptcy laws prohibit mixing and matching both sets. You have to pick one and stick to it.
Since bankruptcy exemptions can make the difference between keeping and losing valuable property, its crucial to choose wisely. Fortunately, you wont have to make the decision on your own. Our Bucks County bankruptcy lawyers have handled over 10,000 successful filings, and are ready to apply our comprehensive experience to your case.
In addition to the exemptions weve already covered namely the homestead exemption and the motor vehicle exemption other federal bankruptcy exemptions include the following:
- Crime Victim Compensation Unlimited
- Personal Injury Awards $23,675, with some exceptions
- Public Assistance Benefits Unlimited
- Retirement Accounts Unlimited, with exceptions for IRAs and Roth IRAs , including 401s
- Social Security Benefits Unlimited
- Tools of the Trade $2,375
- Unemployment Benefits Unlimited