Tuesday, December 22, 2015, AM | Leave Comment
Bankruptcy can be one of the most trying financial situations. It represents an admission that you are unable to repay one or more debts, which in turn starts a process designed to help the lender recover their losses.
By better understanding the process of bankruptcy, you can have a better idea of what you may lose. This can help you decide if bankruptcy is the path you should take.
When talking about bankruptcy, it is important to understand that there are two main types of bankruptcy: chapter 7 and chapter 13.
Each is used in specific situations.
Chapter 7 bankruptcy tends to be reserved for individuals with a low income. It does not afford as much protection as chapter 13 bankruptcy, as it allows a trustee to try to sell any non-exempt assets to reconcile a debt.
Chapter 13 is applicable to most people. It allows individuals to keep their property by consolidating debts into a monthly repayment plan. It also allows certain debts to be dropped while providing more protection to the person in debt than chapter 7 bankruptcy.
What Property is Exempt?
The types of property exempt from bankruptcy will depend upon where you live. States generally allow a primary residence, a vehicle and items considered family heirlooms to be considered exempt when they are under a certain value.
The only exemptions that do not change are federal exemptions. They allow for assets like retirement benefits, disability benefits and a fixed amount of earned but unpaid wages to be exempt.
Will You Lose Non-Exempt Property?
As explained earlier, you are only at risk for losing non-exempt property if you file chapter 7 bankruptcy.
Even if you do, your non-exempt property may still be considered yours after your bankruptcy hearing.
This tends to happen if your non-exempt property does not provide a profit to the trustee. They will try to sell items to ensure that they can recover some of the debts owed to the appropriate parties. If they are unable to do this, then your property will still remain yours.
Maximizing What You Can Keep
The trick to bankruptcy proceedings is to utilize keen legal knowledge. Given that the law can change depending upon where you live, this knowledge can be difficult to obtain.
Experienced bankruptcy lawyers in your local area will often help you keep more of what you own by knowing what the law considers as exempt property.
Bankruptcy attorneys in Orlando, FL, like those at the Law Office of K. Hunter Goff, P.A. can help to ensure that you retain as much of your property as exempt assets according to applicable law.
Should You Opt for Bankruptcy?
While bankruptcy itself is unattractive, there are times when it is the right decision. You may need to opt for it to limit your debts so you can repay them in a reasonable manner.
Ensure that you consult with an experienced legal professional before you opt for bankruptcy. This will help you familiarize yourself with what you stand to lose and gain by proceeding with this legal motion.
Anica Oaks is a Freelance writer and web enthusiast. Read some of her published work on her Google+ page.