Chapter 7 bankruptcy is known as liquidation bankruptcy, as certain assets you may own can be taken by the trustee and sold to pay your creditors before you are granted a discharge of debts. However, many assets are exempt (protected) and can't be taken by the trustee. As a result, most people who file Chapter 7 bankruptcy don't lose anything but their debts.
I'm Joel Gross, a bankruptcy lawyer in Clermont, Florida. If you are struggling to pay your debts or are surviving by making minimum payments, I offer a free initial consultation to evaluate your situation and determine if you have any assets you would lose by filing Chapter 7 bankruptcy.
That really depends on your individual circumstances. The law allows you to have a certain dollar value in property that is considered exempt from creditors (meaning you get to keep it) and some property is entirely exempt from creditors regardless of the dollar value.
Examples of assets that can't be taken by the Chapter 7 bankruptcy trustee include equity in your home, retirement savings (IRA's 401k's, 403b's, equity in a car up to $1,000 and personal belongings up to $1,000. If you do not have a homestead or receive the benefit of a homestead you can claim an additional $4,000. These exemption amounts are per person filing. There are many other exemptions you may be entitled to claim. Only an experienced bankruptcy attorney will know which ones you can claim and which ones you cannot.
However not all assets are protected. Any property which falls outside your exemptions can and will be taken by the trustee. If you have significant assets that you would lose in a Chapter 7 bankruptcy filing, you may be able to retain those assets by filing Chapter 13 bankruptcy.
Many people fear that the bankruptcy trustee will come to their home and make an inventory of everything they own. While the trustee could come to your home, it is very rare. In most cases, you will simply sign a petition listing all of your assets and swear that it is true.
If you have a car, motorcycle, boat, or any other item used to secure your debt, like furniture, computers, washer and dryer, you may be able reduce the amount you owe to the current value of the vehicle or item.
Don't cash out your 401(k) or IRA account to pay credit card debts. If you file Chapter 7 bankruptcy, you can keep your retirement savings, equity in your house and most of your personal belongings. If you withdraw your retirement savings to pay bills, not only will you have to pay a penalty and taxes to the IRS, but a lot of people who do this end up filing bankruptcy anyway, only now their nest egg is gone.
To schedule a no-cost and no-obligation consultation with me, Clermont Chapter 7 bankruptcy attorney Joel Gross, call 352-536-6288 or send an email. Evening and weekend appointments are offered for those who cannot meet during business hours. Spanish-speaking service is available.