Filing for bankruptcy is a tough decision with many things to consider. One thing that you may be wondering is what will happen to your assets when you file for bankruptcy. Will you lose them?
What happens to your property when you’ve filed for bankruptcy is dependent upon what type of bankruptcy you’ve filed. If you file for Chapter 13 bankruptcy, you don’t lose any of your property. But if you file for Chapter 7 bankruptcy, you could lose some of your property that is not shielded by an exemption. However, many people who file for Chapter 7 find that (due to exemptions or the property not worth as much as it would cost to put it for sale) they get to keep all of their assets.
Chapter 13 Bankruptcy
Under Chapter 13 bankruptcy, you won’t lose any of your property – regardless of whether it’s exempt. However, you will be required to suggest a repayment plan that you will use to pay down your debt. For three to five years you will be required to make a payment every month. These debts will be eliminated once all of your payments have been made.
Chapter 7 Bankruptcy
Under Chapter 7 bankruptcy, you don’t have to worry about repaying any of your debt. Rather, you will be required to relinquish control of your non-exempt property so that your bankruptcy trustee can sell it and allocate the proceeds to your creditors. Whether or not property is exempt is determined by the state (or by federal exemptions if your state permits you to apply them). Then, after the conclusion of any other requirements, you’re bankruptcy debts will be discharged. This process usually takes anywhere from four to six months from the date you file.
Property usually protected by state exemption laws includes your car, clothing, home, home furnishings, tools of your trade, and retirement accounts. Some states also provide you with a wildcard exemption under which you are given a dollar amount to protect specific property.
Even if your property doesn’t fall within an exemption, there’s still a chance you could keep it. If the property isn’t worth the time and money it would take to sell it, the trustee may decide it’s not worth selling.
However, if your non-exempt property is worth enough, you could possibly be able to negotiate keeping it. However, in return you’ll be required to give up something else.
But if your property must be sold, you always have the option to buy it back. If you can collect at least the same amount of money your creditors would have received had the property sold, you can buy it back. For property that is really important to people, you can always sell exempt property, borrow money, or use income to pay for it.
An Experienced Bankruptcy Attorney Can Help
If you are considering filing for bankruptcy, (and seek to have your student loans discharged) the experienced and compassionate Arkansas Bankruptcy Attorneys at Caddell Reynolds can help you to figure out your best options and move forward.
We examine the facts of your case individually and will walk you through each step of the legal process. To learn more or to schedule a free consultation, contact us at 800-671-4100 today!